Agricultural Marketing Service
Animal and Plant Health Inspection Service
Commodity Credit Corporation
Forest Service
Rural Business-Cooperative Service
Rural Housing Service
Rural Utilities Service
International Trade Administration
National Oceanic and Atmospheric Administration
Patent and Trademark Office
Federal Energy Regulatory Commission
Centers for Disease Control and Prevention
Children and Families Administration
Food and Drug Administration
Health Resources and Services Administration
National Institutes of Health
Substance Abuse and Mental Health Services Administration
Coast Guard
Federal Emergency Management Agency
U.S. Customs and Border Protection
Fish and Wildlife Service
Indian Affairs Bureau
Land Management Bureau
Antitrust Division
Executive Office for Immigration Review
Copyright Royalty Board
Federal Aviation Administration
Federal Motor Carrier Safety Administration
Federal Railroad Administration
Maritime Administration
National Highway Traffic Safety Administration
Alcohol and Tobacco Tax and Trade Bureau
Comptroller of the Currency
Internal Revenue Service
United States Mint
Consult the Reader Aids section at the end of this issue for phone numbers, online resources, finding aids, and notice of recently enacted public laws.
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DHS, Privacy Office.
Final rule.
The Department of Homeland Security (“DHS”) is updating its regulations related to the procedures for disclosure of records information under the Privacy Act. Specifically, DHS is updating its regulations to state that the DHS Office of the General Counsel or its designee is the authorized appeals authority with respect to requests made under the Privacy Act.
This final rule is effective on February 28, 2020.
For information about this document call Jonathan R. Cantor, Chief Privacy Officer (Acting), telephone 202-343-1717.
The Department of Homeland Security (“DHS”) is updating its regulations to state that the DHS Office of the General Counsel or its designee is the authorized appeals authority with respect to requests made under the Privacy Act.
DHS did not publish a notice of proposed rulemaking for this rule. Under Title 5 of the United States Code (U.S.C.), Section 553(b)(A), this final rule is exempt from notice and public comment rulemaking requirements because the change involves rules of agency organization, procedure, or practice. In addition, under 5 U.S.C. 553(b)(B), an agency may waive the notice and comment requirements if it finds, for good cause, that notice and comment is impracticable, unnecessary, or contrary to the public interest. DHS finds that notice and comment is unnecessary under 5 U.S.C. 553(b)(B) because the change of the named appellate authority is an agency procedural update that will have no substantive effect on the public. For the same reasons, DHS finds that good cause exists under 5 U.S.C. 553(d) for making this final rule effective immediately upon publication.
DHS considered numerous statutes and executive orders related to rulemaking when developing this rule. Below are summarized analyses based on these statutes or executive orders.
Executive Orders 12866 (Regulatory Planning and Review) and 13563 (Improving Regulation and Regulatory Review) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Order 13771 (Reducing Regulation and Controlling Regulatory Costs) directs agencies to reduce regulation and control regulatory costs and provides that “for every one new regulation issued, at least two prior regulations be identified for elimination, and that the cost of planned regulations be prudently managed and controlled through a budgeting process.”
The Office of Management and Budget (OMB) has not designated this rule a significant regulatory action under section 3(f) of Executive Order 12866. Accordingly, OMB has not reviewed it. Because this rule is not a significant regulatory action, this rule is exempt from the requirements of Executive Order 13771.
Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, DHS has considered whether this rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.
This rule is not preceded by a notice of proposed rulemaking. Therefore, it is exempt from the requirements of the Regulatory Flexibility Act (5 U.S.C. 601-612). The Regulatory Flexibility Act does not apply when notice and comment rulemaking is not required. This rule consists of a technical amendment to internal agency procedures and does not have any substantive effect on the regulated industry or small businesses.
This rule calls for no new collection of information under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520.
DHS reviews proposed actions to determine whether the National Environmental Policy Act (NEPA)
The CEQ regulations allow federal agencies to establish, with CEQ review and concurrence, categories of actions (“categorical exclusions”) which experience has shown do not individually or cumulatively have a significant effect on the human environment and, therefore, do not require an Environmental Assessment (EA) or Environmental Impact Statement (EIS). 40 CFR 1507.3(b)(2)(ii), 1508.4. For an action to be categorically excluded, it must satisfy each of the following three conditions: (1) The entire action clearly fits within one or more of the categorical exclusions; (2) the action is not a piece of a larger action; and (3) no extraordinary circumstances exist that create the potential for a significant environmental effect. Instruction Manual section V.B(2)(a)-(c).
This rule is a technical amendment that updates internal agency procedures. Specifically, the amendment updates the designated appeals authority for requests made under the Privacy Act. Therefore, it clearly fits within categorical exclusion A3(a) “Promulgation of rules . . . of a strictly administrative or procedural nature.” Instruction Manual, Appendix A, Table 1. Furthermore, the rule is not part of a larger action and presents no extraordinary circumstances creating the potential for significant environmental impacts. Therefore, the amendment is categorically excluded from further NEPA review.
Classified information, Courts, Freedom of information, Government employees, Privacy.
For the reason stated in the preamble, DHS amends 6 CFR part 5 as follows:
6 U.S.C. 101
Subpart A also issued under 5 U.S.C. 552
Subpart B also issued under 5 U.S.C. 552a.
Agricultural Marketing Service, USDA.
Final rule.
This rule implements a recommendation from the Cherry Industry Administrative Board (Board) to decrease the assessment rate established for the 2019-20 and subsequent fiscal years. The assessment rate will remain in effect indefinitely unless modified, suspended, or terminated.
Effective March 30, 2020.
Jennie M. Varela, Marketing Specialist, or Christian D. Nissen, Regional Director, Southeast Marketing Field Office, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA; Telephone: (863) 324-3375, Fax: (863) 291-8614, or Email:
Small businesses may request information on complying with this regulation by contacting Richard Lower, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW, STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202)720-8938, or Email:
This action, pursuant to 5 U.S.C. 553, amends regulations issued to carry out a marketing order as defined in 7 CFR 900.2(j). This rule is issued under Marketing Agreement and Order No. 930, both as amended (7 CFR part 930), regulating the handling of tart cherries produced in the states of Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin. Part 930 (referred to as the “Order”) is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” The Board locally administers the Order and is comprised of producers and handlers of tart cherries operating within the production area, and a public member.
The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Orders 13563 and 13175. This action falls within a category of regulatory actions that the Office of Management and Budget (OMB) exempted from Executive Order 12866 review. Additionally, because this rule does not meet the definition of a significant regulatory action, it does not trigger the requirements contained in Executive Order 13771. See OMB's Memorandum titled “Interim Guidance Implementing Section 2 of the Executive Order of January 30, 2017, titled `Reducing Regulation and Controlling Regulatory Costs' ” (February 2, 2017).
This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Under the Order now in effect, tart cherry handlers are subject to assessments. Funds to administer the Order are derived from such assessments. It is intended that the assessment rate will be applicable to all assessable tart cherries for the 2019-20 crop year and continue until amended, suspended, or terminated.
The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law
This rule decreases the assessment rate from $0.0075, the rate that was established for the 2016-17 and subsequent fiscal years, to $0.00575 per pound of tart cherries handled for the 2019-20 and subsequent fiscal years. Under the marketing order, the Board also recommends an allocation of assessments for operations and for promotion activities. This action decreases the portion of assessments allocated to research and promotion activities from $0.0065 to $0.005 per pound of tart cherries and decreases the portion allocated to administrative expenses from $0.001 to $0.00075 per pound of tart cherries.
The Order provides authority for the Board, with the approval of USDA, to formulate an annual budget of expenses and collect assessments from handlers to administer the program. The members are familiar with the Board's needs and with the costs of goods and services in their local area and are thus in a position to formulate an appropriate budget and assessment rate. The assessment rate is formulated and discussed in a public meeting. Thus, all directly affected persons have an opportunity to participate and provide input.
For the 2016-17 and subsequent fiscal years, the Board recommended, and USDA approved, an assessment rate that would continue in effect from fiscal year to fiscal year unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Board or other information available to USDA.
The Board met on September 12, 2019, and unanimously recommended 2019-20 expenditures of $1,956,500, and an assessment rate of $0.00575 per pound of tart cherries, divided into $0.005 for promotional expenses and $0.00075 for administrative expenses. In comparison, last year's budgeted expenditures were $2,374,450. The assessment rate of $0.00575 is $0.00175 lower than the rate currently in effect. The Board recommended decreasing the assessment rate to reduce the assessment burden on handlers and utilize funds from the authorized reserve to help cover its expenses.
The major expenditures recommended by the Board for the 2019-20 year include $1,514,500 for research and promotion, $250,000 for salaries and wages, and $130,000 for administrative expenses. Budgeted expenses for these items in 2018-19 were $1,867,450, $275,000, and $130,000, respectively.
The Board derived the recommended assessment rate by considering anticipated expenses, an estimated crop of 230.74 million pounds of tart cherries, and the amount of funds available in the authorized reserve. Income derived from handler assessments, calculated at $1,326,755 (230.74 million pounds × $0.00575/pound), along with interest income and funds from the Board's authorized reserve, should be adequate to cover budgeted expenses of $1,956,500. Funds in the reserve are estimated to be $81,553 at the end of the 2019-20 fiscal year.
The assessment rate established in this rule will continue in effect indefinitely unless modified, suspended, or terminated by USDA upon recommendation and information submitted by the Board or other available information.
Although this assessment rate will be in effect for an indefinite period, the Board will continue to meet prior to or during each fiscal year to recommend a budget of expenses and consider recommendations for modification of the assessment rate. The dates and times of Board meetings are available from the Board or USDA. Board meetings are open to the public and interested persons may express their views at these meetings. USDA will evaluate Board recommendations and other available information to determine whether modification of the assessment rate is needed. Further rulemaking will be undertaken as necessary. The Board's 2019-20 budget and those for subsequent fiscal years will be reviewed and, as appropriate, approved by USDA.
Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this rule on small entities. Accordingly, AMS has prepared the regulatory flexibility analysis.
The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.
There are approximately 400 producers of tart cherries in the regulated area and approximately 40 handlers of tart cherries who are subject to regulation under the Order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts of less than $1,000,000, and small agricultural service firms have been defined as those whose annual receipts are less than $30,000,000 (13 CFR 121.201).
According to the National Agricultural Statistics Service (NASS) and Board data, the average annual grower price for tart cherries utilized for processing during the 2018-19 season was approximately $0.196 per pound. With total utilization at 288.8 million pounds for the 2018-19 season, the total 2018-19 value of the crop utilized for processing is estimated at $56.6 million. Dividing the crop value by the estimated number of producers (400) yields an estimated average receipt per producer of $141,500. This is well below the SBA threshold for small producers.
A free on board (FOB) price of $0.80 per pound for frozen tart cherries was reported by the Food Institute during the 2018-19 season. Based on utilization, this price represents a good estimate of the price for processed cherries. Multiplying this FOB price by total utilization of 288.8 million pounds results in an estimated handler-level tart cherry value of $231 million. Dividing this figure by the number of handlers (40) yields estimated average annual handler receipts of $5.8 million, which is below the SBA threshold for small agricultural service firms. Assuming a normal distribution, the majority of producers and handlers of tart cherries may be classified as small entities.
This rule decreases the assessment rate collected from handlers for the 2019-20 and subsequent fiscal years from $0.0075 to $0.00575 per pound of tart cherries, with $0.005 per pound allocated to promotion and research and $0.00075 per pound allocated to administrative expenses. The Board unanimously recommended 2019-20 expenditures of $1,956,500, and an assessment rate of $0.00575 per pound of tart cherries. The assessment rate of $0.00575 per pound is $0.00175 lower than the 2018-19 rate. The volume of assessable tart cherries for the 2019-20 fiscal year is estimated at 230.74 million. Thus, the $0.00575 rate should
The major expenditures recommended by the Board for the 2019-20 year include $1,514,500 for research and promotion, $250,000 for salaries and wages, and $130,000 for administrative expenses. Budgeted expenses for these items in 2018-19 were $1,867,450, $275,000, and $130,000, respectively.
The Board recommended decreasing the assessment rate and utilizing funds from its authorized reserve in order to relieve the assessment burden on handlers. This action will use the Board's reserve balance and maintain it below the levels authorized under the Order.
Prior to arriving at this budget and assessment rate, the Board considered information from the Board's Executive Committee (Committee). Alternative expenditure levels were discussed by the Committee, which reviewed the relative value of various activities to the tart cherry industry. The Committee determined all program activities were adequately funded and essential to the functionality of the Order; thus, no alternate expenditure levels were deemed appropriate. Additionally, the Board discussed alternatives of maintaining the current assessment rate of $0.0075 per pound or reducing marketing expenditures to achieve a lower rate. However, the Board determined it would be appropriate to reduce the assessment burden to handlers using some of the reserves built up following recurring seasons with large crops. The Board also determined the recommended promotion expenditures, which are lower than in previous seasons, were appropriate and further reduction might hinder sales growth.
Based on these discussions and estimated deliveries, the recommended assessment rate of $0.00575 per pound of tart cherries should provide $1,326,755 in assessment income. Further, the Board recommended allocating $0.005 for promotional expenses and $0.00075 for administrative expenses. The Board determined that assessment revenue, along with funds from the reserve and interest income, should be adequate to cover budgeted expenses for the 2019-20 fiscal year.
A review of historical information and preliminary information pertaining to the upcoming fiscal year indicates that the average grower price for the 2019-20 crop year should be approximately $0.20 per pound of tart cherries. Therefore, the estimated assessment revenue for the 2019-20 crop year as a percentage of total grower revenue would be about 2.9 percent.
This action decreases the assessment obligation imposed on handlers. Assessments are applied uniformly on all handlers, and some of the costs may be passed on to producers. However, decreasing the assessment rate reduces the burden on handlers and may also reduce the burden on producers.
The Board's meeting was widely publicized throughout the tart cherry industry. All interested persons were invited to attend the meeting and participate in Board deliberations on all issues. Like all Board meetings, the September 12, 2019, meeting was a public meeting, and all entities, both large and small, were able to express views on this issue.
In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the Order's information collection requirements have been previously approved by the OMB and assigned OMB No. 0581-0177, Tart Cherries Grown in Michigan, New York, Pennsylvania, Oregon, Utah, Washington, and Wisconsin. No changes in those requirements are necessary as a result of this action. Should any changes become necessary, they would be submitted to OMB for approval.
This rule imposes no additional reporting or recordkeeping requirements on either small or large tart cherry handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. As noted in the initial regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this final rule.
AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.
A proposed rule concerning this action was published in the
No comments were received. Accordingly, no changes will be made to the proposed rule.
A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at:
After consideration of all relevant material presented, including the information and recommendation submitted by the Board and other available information, it is hereby found that this rule will tend to effectuate the declared policy of the Act.
Marketing agreements, Reporting and recordkeeping requirements, Tart cherries.
For the reasons set forth in the preamble, 7 CFR part 930 is amended as follows:
7 U.S.C. 601-674.
On and after October 1, 2019, the assessment rate imposed on handlers shall be $0.00575 per pound of tart cherries grown in the production area and utilized in the production of tart cherry products. Included in this rate is $0.005 per pound of tart cherries to cover the cost of the research and promotion program and $0.00075 per pound of tart cherries to cover administrative expenses.
Animal and Plant Health Inspection Service, USDA.
Final rule.
We are establishing standards to allow us to recognize compartments for animal disease status, consistent with World Organization for Animal Health international standards. Under this action, when a foreign government submits a request for recognition of a compartment, we will conduct a compartmentalization evaluation based on a list of factors that parallel those we use when conducting regionalization evaluations, and will provide for public notice of and comment on the risk assessment. We are also adding provisions for imposing import restrictions or prohibitions when a compartment we have recognized as disease-free experiences an outbreak, and for lifting those sanctions once the outbreak has been controlled. These standards for compartmentalization will provide a means for preserving international trade when regionalization is not feasible.
Effective March 30, 2020.
Dr. Lisa Rochette, Staff Officer, Regionalization Evaluation Services, Strategy and Policy, VS, APHIS, 920 Main Campus Drive, Suite 200, Raleigh, NC 27606; (919) 855-7276;
The regulations in 9 CFR part 92, “Importation of Animals and Animal Products; Procedures for Requesting Recognition of Regions” (referred to below as the regulations), set forth the process by which a foreign government may request recognition of the animal health status of a region. In order to conduct a valid evaluation of a region's animal health status and any risk that may be associated with the action requested, it is important for the Animal and Plant Health Inspection Service (APHIS) of the U.S. Department of Agriculture to have pertinent information regarding the region, its disease history, its animal health practices and capabilities, and any effect its import practices or relationship to adjacent regions might have on disease risk.
When regionalization is not feasible, compartmentalization is a means that may be used to preserve trade. Under compartmentalization, a country may define and manage animal subpopulations of distinct health status and under common biosecurity management within its territory, in accordance with the guidelines in the World Organization for Animal Health (OIE) Terrestrial Animal Health Code, for the purpose of disease control and international trade. Compartmentalization is distinct from regionalization, which involves the recognition of geographical zones of a country that can be identified and characterized by their level of risk for different diseases, but the two are not mutually exclusive.
On April 3, 2019, we published in the
We solicited comments concerning our proposal for 60 days ending June 3, 2019. We received seven comments on the proposal. They were from a foreign government, meat and poultry trade organizations, an organization representing poultry veterinarians, and the public. All responses were in favor of the proposed rule, though one requested further information regarding issues largely related to implementation of the proposed regulations. The comments and APHIS' responses are discussed below.
The commenter asked how APHIS will prioritize the compartmentalization requests it receives.
Similar to regionalization evaluations, APHIS will evaluate compartmentalization requests in the order they are received and process them with the resources available.
The commenter wanted to know how long it will take for APHIS to begin evaluating a compartmentalization request after we receive it.
As with regionalization evaluations, the timeframe to initiate and complete a compartmentalization evaluation is subject to several factors, including the timely submission of supporting information by the country requesting the evaluation. Supporting information required as part of the request is listed in § 92.2(d) of this final rule.
The commenter asked how we plan to conduct compartmentalization evaluations. Specifically, the commenter asked whether APHIS will perform evaluations on each of the compartments proposed by the country's national competent authority, or will APHIS instead recognize the competent authority's evaluation and approval of compartments presented by companies in that country.
Unlike regionalization, where the national competent authority of a country provides oversight and programs to all entities within the region, compartments are a function of the individual company that controls the compartment. We anticipate a limited number of compartments per country, and therefore expect to evaluate and approve the national competent authority's program and all individual compartment's controlling company and compartment components. We may also consider developing a compartmentalization systems approach if several compartments become approved in a country. This approach would be dependent on our assessment of the ability of the national competent authority of that country to administer and oversee a compartmentalization program.
A commenter asked if APHIS will conduct site visits to evaluate compartments and what the role of the requesting country's government would be in the evaluation process.
As one of the requirements for our evaluation of a country's compartmentalization program, we will conduct an initial site visit to compartments and associated facilities such as national competent authority offices and laboratories. We may also require additional site visits to approve compartments that become recognized by the country's national competent authority after our initial site visit, as well as visits to confirm ongoing satisfactory maintenance of the compartmentalization program or the status of an individual compartment. We intend to collaborate with the country's national competent authority when conducting each compartment evaluation.
The commenter asked what happens if APHIS does not approve a country's compartment request.
As with regionalization evaluations, we will use a risk assessment framework
If we do not approve a compartmentalization program or individual compartment, we may not draft a formal risk evaluation document, but we will inform the requesting country of the reasons that the program or the compartment they have requested does not meet APHIS' criteria.
The commenter asked what the procedure would be for restoring a compartment's status after a disease outbreak.
A livestock or poultry disease outbreak involving animals for which the compartment was approved constitutes a major noncompliance. If a component
The commenter asked how APHIS will protect the privacy of business and confidential proprietary information submitted with compartmentalization requests, particularly considering that we intend to publish evaluations and supporting documents for public comment.
When providing information to APHIS, submitters must indicate that the provided information is confidential business information. Upon intake, APHIS will review this information to ensure that the provided information is not information that the submitter would ordinarily disclose to the public. APHIS intends to protect confidential business information in accordance with legal and regulatory obligations and practice.
Finally, the commenter asked if the consultations and decisions resulting from compartmentalization requests will be published on the APHIS website.
A list of countries requesting an APHIS compartmentalization evaluation and a description of each compartment requested will be available on the APHIS website.
Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule, without change.
This final rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget. This final rule is not an Executive Order 13771 regulatory action because this final rule is not significant under Executive Order 12866. Further, APHIS considers this rule to be a deregulatory action under Executive Order 13771 as the action is intended to minimize trade disruptions and could thereby provide benefits to producers and consumers.
In accordance with the Regulatory Flexibility Act, we have analyzed the potential economic effects of this action on small entities. The analysis is summarized below. Copies of the full analysis are available by contacting the person listed under
APHIS is establishing standards to allow us to recognize compartments for animal disease status, consistent with World Organization for Animal Health international standards. Like our existing process for recognizing foreign regions for disease status, our process will include information requirements for evaluating the animal health status of a compartment for which a market access request has been submitted. Under this rule, we will perform a risk assessment to evaluate the animal health status of a compartment. If after conducting the evaluation, we deem the risk of importing animals or animal products from that compartment to be acceptable, we will publish a
This rule will add compartmentalization as an option for evaluating disease status, but not propose a specific implementation of this option. Compartmentalization may be used when regionalization's broader geographic requirements are more costly or simply not feasible. The potential economic effects of imports based on a compartmentalization approach depend on the disease status evaluation specific to the particular commodity and facility, and the expected volume of the commodity imported under this option.
This final rule sets forth compartmentalization as a means of minimizing trade disruptions and delineate the information requirements that will be used for the evaluation of compartments. There are no costs or cost savings that will directly result from this rule. Only in the application of compartmentalization might gains from related trade be realized.
The APHIS Administrator has determined that this action will not have a significant economic impact on a substantial number of small entities.
This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. If this final rule is adopted: (1) All State and local laws and regulations that are inconsistent with this rule will be preempted; (2) no retroactive effect will be given to this rule; and (3) administrative proceedings will not be required before parties may file suit in court challenging this rule.
In accordance with section 3507(d) of the Paperwork Reduction Act of 1995
The Animal and Plant Health Inspection Service is committed to compliance with the E-Government Act to promote the use of the internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes. For information pertinent to E-Government Act compliance related to this final rule, please contact Mr. Joseph Moxey, APHIS' Information Collection Coordinator, at (301) 851-2483.
Animal diseases, Imports, Livestock, Poultry and poultry products, Region, Reporting and recordkeeping requirements.
Accordingly, we are amending 9 CFR part 92 as follows:
7 U.S.C. 1622 and 8301-8317; 21 U.S.C. 136 and 136a; 31 U.S.C. 9701; 7 CFR 2.22, 2.80, and 371.4.
(a) The representative of the national government(s) of any country or countries who has the authority to make such a request may request that APHIS recognize the animal health status of a region or a compartment.
(b) Requests for recognition of the animal health status of a region, other than requests submitted in accordance with paragraph (c) of this section, must include, in English, the information in paragraphs (b)(1) through (8) of this section about the region. More detailed information regarding the specific types of information that will enable APHIS to most expeditiously conduct an evaluation of the request is available at:
(1) Scope of the evaluation being requested.
(2) Veterinary control and oversight.
(3) Disease history and vaccination practices.
(4) Livestock demographics and traceability.
(5) Epidemiological separation from potential sources of infection.
(6) Surveillance.
(7) Diagnostic laboratory capabilities.
(8) Emergency preparedness and response.
(c) Requests for recognition that a region is historically free of a disease based on the amount of time that has elapsed since the disease last occurred in a region, if it has ever occurred, must include, in English, the information in paragraphs (c)(1) through (6) of this section about the region. More detailed information regarding the specific types of information that will enable APHIS to most expeditiously conduct an evaluation of the request is available at:
(1) Scope of the evaluation being requested.
(2) Veterinary control and oversight.
(3) Disease history and vaccination practices.
(4) Disease notification.
(5) Disease detection.
(6) Barriers to disease introduction.
(d) Requests for recognition of the animal health status of a compartment must include, in English, the information in paragraphs (d)(1) through (8) of this section about the compartment. More detailed information regarding the specific types of information that will enable APHIS to most expeditiously conduct an evaluation of the request is available at:
(1) Scope of the evaluation being requested.
(2) Veterinary control and oversight of the compartment.
(3) Disease history and vaccination practices.
(4) Livestock or poultry commodity movement and traceability.
(5) Epidemiologic separation of the compartment from potential sources of infection.
(6) Surveillance.
(7) Diagnostic laboratory capabilities.
(8) Emergency preparedness and response.
(e) A list of those regions for which an APHIS recognition of their animal health status has been requested, the disease(s) under evaluation, and, if available, the animal(s) or product(s) the region wishes to export, is available at:
(f) A list of countries that have requested an APHIS compartmentalization evaluation, and a description of the requested compartment is available at:
(g) If, after review and evaluation of the information submitted in accordance with paragraph (b), (c), or (d) of this section, APHIS believes the request can be safely granted, APHIS will indicate its intent and make its evaluation available for public comment
(h) APHIS will provide a period of time during which the public may comment on its evaluation. During the comment period, the public will have access to the information upon which APHIS based its evaluation, as well as the evaluation itself. Once APHIS has reviewed all comments received, it will make a final determination regarding the request and will publish that determination in the
(i) If a region or compartment is granted animal health status under the provisions of this section, the representative of the national government(s) of any country or countries who has the authority to make a regionalization or compartmentalization request may be required to submit additional information pertaining to animal health status or allow APHIS to conduct additional information collection activities in order for that region or compartment to maintain its animal health status.
This section applies to regions or compartments that are designated under this subchapter as free of a specific animal disease and then experience an outbreak of that disease.
(a)
(b)
(2) Prior to taking any action to relieve prohibitions or restrictions, APHIS will make information regarding its reassessment of the region's or compartment's disease status available to the public for comment. APHIS will announce the availability of this information by means of a notice in the
(c)
(1) Publish a notice in the
(2) Publish a notice in the
(3) Publish another document in the
Federal Aviation Administration (FAA), DOT.
Final special conditions.
These special conditions are issued for the Boeing Company (Boeing) Model 777-9 series airplane. This airplane will have a novel or unusual design feature when compared to the state of technology envisioned in the airworthiness standards for transport category airplanes. This design feature is associated with the installation of an overhead flight attendant rest (OFAR) compartment. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
Effective March 30, 2020.
Shannon Lennon, Airframe and Cabin Safety Section, AIR-675, Transport Standards Branch, Policy and Innovation Division, Aircraft Certification Service, Federal Aviation Administration, 2200 South 216th Street, Des Moines, Washington 98198; telephone and fax 206-231-3209; email
On April 24, 2018, The Boeing Company applied for an amendment to Type Certificate No. T00001SE to include the new Model 777-9 series airplane. The Boeing Model 777-9 series airplane, which is a derivative of the 777-300ER currently approved under Type Certificate No. T00001SE, is a twin-engine, transport category airplane with seating for up to 495 passengers depending upon airplane configuration, and a maximum takeoff weight of approximately 775,000 lbs.
Under the provisions of title 14, Code of Federal Regulations (14 CFR) 21.101, Boeing must show that the Model 777-9 series airplane continues to meet the applicable provisions of part 25, as amended by amendments 25-1 through 25-139, and parts 26, 34, and 36, and the regulations listed in Type Certificate No. T00001SE or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.
If the Administrator finds that the applicable airworthiness regulations (
Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.
In addition to the applicable airworthiness regulations and special conditions, the Boeing Model 777-9
The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.
The Boeing Model 777-9 series airplane will incorporate the following novel or unusual design features:
This airplane will have an installation of an OFAR compartment. The OFAR compartment of the Boeing Model 777-9 series airplane is novel and unusual due to its design, location, and use on the airplane. It is located in the overhead area of the passenger compartment and crewmembers may occupy this compartment for crew rest purposes during flight.
Boeing has previously installed certified OFAR compartments on Boeing Model 777 series airplanes in varied locations, such as the main passenger seating area, the overhead space above the main passenger cabin seating area, and below the passenger cabin seating area within the cargo compartment. In each case, the Administrator determined that the applicable regulations did not provide all of the necessary requirements because each installation had novel or unusual features by virtue of its design, location, and use on the airplane.
When the Administrator finds that the applicable airworthiness regulations do not contain adequate or appropriate safety standards because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16. The special conditions contain safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
For the Boeing Model 777-9 series airplane, the OFAR compartment is located in the overhead space, above the main passenger cabin seating area, adjacent to Door 5. The OFAR compartment will contain six, eight, or ten private berths depending upon customer configuration. Additionally, only crewmembers who have been trained in OFAR procedures will occupy this compartment, and do so only in flight, not during taxi, takeoff, or landing. Crewmembers will access the OFAR compartment from the main deck by stairs through a vestibule. In addition, a secondary evacuation route, which opens directly into the main passenger seating area, will be available as an alternate route for evacuating occupants of the compartment. The compartment will provide a smoke detection system, an oxygen system, and occupant amenities.
The FAA's design standards, including part § 25.853 (a), (e), and (h), do not adequately address the Boeing Model 777-9 series airplane OFAR compartment due to its design, location, and use on the airplane. This compartment is novel in that it is located in the overhead area of the passenger compartment and crewmembers may occupy this compartment for crew rest purposes during flight. Due to the novel or unusual features associated with the installation of this compartment, the FAA finds that special conditions are necessary to provide a level of safety equal to that established by the airworthiness regulations.
Boeing originally requested that Special Conditions No. 25-230-SC (68 FR 17513, April 9, 2003) for the OFAR compartment on the Model 777 airplane be made applicable to the Boeing Model 777-9 series airplane. However, after the issuance of Special Conditions No. 25-230-SC, the FAA issued Special Conditions No. 25-419-SC (76 FR 10482, February 25, 2011), for OFAR compartments allowed to be occupied during flight on Boeing Model 787 series airplanes, with changes to better address oxygen systems and fire suppression. Those special conditions reflected the methodology necessary to provide an equivalent level of safety for remote OFAR compartments, therefore new special conditions were proposed for these design features on Boeing Model 777-9 series airplanes.
The special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.
Notice of Proposed Special Conditions No. 25-19-05-SC for the Boeing Model 777-9 series airplane was published in the
Boeing requested that the FAA specify that analyses could be used in lieu of flight tests to show compliance with special conditions numbers 10, 11, 12e, and 18b. The FAA does not agree with the requested change. Flight testing is necessary to establish in-flight ventilation conditions, in order to assess the performance of smoke detectors, the penetration of smoke from the OFAR to the cabin, and the capability of the suppression system. Also, the current language has been used on similar special conditions, and these special conditions permitted the use of the similarity analysis that Boeing has requested. The text of this special condition (
As discussed above, these special conditions are applicable to the Boeing Model 777-9 series airplane. Should Boeing apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.
This action affects only certain novel or unusual design features on one model series of airplanes. It is not a rule of general applicability.
Aircraft, Aviation safety, Reporting and recordkeeping requirements.
The authority citation for these special conditions is as follows:
49 U.S.C. 106(f), 106(g), 40113, 44701, 44702, 44704.
Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for the Boeing Model 777-9 series airplane.
1.
a. Appropriate placards must be located inside and outside each entrance to the OFAR compartment to indicate:
(1) The maximum number of occupants allowed during flight.
(2) Occupancy is restricted to crewmembers who are trained in the evacuation procedures for the OFAR compartment.
(3) Occupancy is prohibited during taxi, take-off, and landing.
(4) Smoking is prohibited in the OFAR compartment.
(5) That stowage in the OFAR compartment must be limited to emergency equipment, airplane-supplied equipment (
b. At least one ashtray must be located on both the inside and the outside of any entrance to the OFAR compartment.
c. A limitation in the airplane flight manual, or other means, must be established to restrict occupancy to crewmembers that the pilot in command has determined to be trained in the emergency procedures for the OFAR compartment.
d. A limitation in the airplane flight manual, or other means, must be established to restrict occupancy to crewmembers that have received training to be able to rapidly use the evacuation routes of the OFAR compartment.
e. A means must be in place for any door installed between the OFAR compartment and the passenger cabin to be quickly opened from inside the compartment, even when crowding occurs at each side of the door.
f. For all OFAR compartment doors installed, a means must be in place that precludes anyone from being trapped inside the OFAR compartment. If a manufacturer or operator installs a locking mechanism on a door, it must be capable of being unlocked from the outside without the aid of special tools. The lock must not prevent opening from the inside of the OFAR compartment at any time.
g. The means of opening doors and hatches to the OFAR compartment must be simple and obvious. Crewmembers must be able to close OFAR compartment doors and hatches from the main passenger cabin. Doors or hatches that separate the OFAR compartment from the main deck must not adversely affect evacuation of occupants on the main deck, for example, by slowing evacuation by encroaching into aisles, or causing injury to those occupants during opening of doors, or while doors are opened.
2.
a. These routes must be located with sufficient separation within the OFAR compartment to minimize the possibility of an event either inside or outside of the OFAR compartment rendering both routes inoperative.
b. The routes must be designed to minimize the possibility of blockage, which might result from fire, mechanical or structural failure, or persons standing below or against the OFAR compartment outlets.
c. One of the two OFAR evacuation routes must not be located where egress from the OFAR compartment may be impeded during times when normal movement or occupancy is allowed or evacuation by passengers occurs (for example, the main aisle, cross aisle, or galley complex). If an evacuation route is in an area where normal movement of passengers occurs, it must be demonstrated that passengers would not impede egress to the main deck.
d. If low headroom is at or near the evacuation route, provisions must be made to prevent or to protect occupants of the OFAR compartment from head injury.
e. Use of evacuation routes must not depend on any powered device.
f. If an OFAR compartment outlet is over an area of passenger seats, a maximum of five passengers may be displaced from their seats temporarily during the process of evacuating an incapacitated person(s).
g. If an evacuation procedure involves the evacuee stepping on seats, the seats must not be damaged to the extent that they would not be acceptable for occupancy during an emergency landing.
h. OFAR compartment emergency evacuation procedures—including procedures for emergency evacuation of an incapacitated occupant from the OFAR compartment—must be established by the applicant. The applicant must transmit all of these procedures to each owner and operator for incorporation into its training programs and appropriate operational manuals.
i. A limitation must be included in the airplane flight manual, or other suitable means, to require that crewmembers are trained in the use of the OFAR compartment evacuation routes.
3.
a. At least one exit sign, located near each OFAR compartment outlet, meeting the emergency lighting requirements of § 25.812(b)(1)(i).
(1) One allowable exception to the minimum area requirement of § 25.812(b)(1)(i) is an exit sign having a reduced background area of no less than 5.3 square inches that is installed where the material surrounding the exit sign is light in color (such as white, cream, or light beige).
(2) If the material surrounding the exit sign is not light in color, a sign with a minimum of a one-inch-wide background border around the letters is acceptable.
(3) Another allowable exception requirement of § 25.812(b)(1)(i) in the OFAR compartment is a sign with a symbol that the FAA has determined to be equivalent for use as an exit sign that meets § 25.811(d).
b. An appropriate placard for general access should be located conspicuously on or near each OFAR compartment door or hatch that defines the location and the operating instructions for access to and operation of the outlet door or hatch.
c. Placards must be readable from a distance of 30 inches under emergency lighting conditions.
d. The door handles, hatch handles, and operating-instruction placards required by Special Condition 4(b) of these special conditions must be illuminated to at least 160 micro lamberts under emergency lighting conditions.
5.
a. This emergency illumination must be powered independent of the main lighting system.
b. The sources of general cabin illumination of the OFAR may be common to both the emergency and the main lighting systems, if the power supply to the emergency lighting system is independent of the power supply to the main lighting system.
c. The emergency illumination level must be sufficient to allow occupants of the OFAR compartment to locate and move to the main passenger cabin floor by means of each evacuation route.
d. The emergency illumination level must be sufficient, with the privacy curtains in the closed position, for each occupant of the OFAR compartment to locate a deployed oxygen mask required by Special Condition 13 of these special conditions.
6.
a. Two-way communications must also be available between occupants of the OFAR compartment and each flight attendant station in the passenger cabin that is required per § 25.1423(g) to have a microphone for the public address system.
b. The public address system must be able to communicate the relevant safety information to the crewmembers in the OFAR compartment (for example, fire in flight, aircraft depressurization, and preparation of the compartment for landing).
7.
8.
a. If the OFAR compartment has no seats, at least one means must be provided to cover anticipated turbulence (
b. Seatbelt-type restraints must be provided for berths and must be compatible for the sleeping position during cruise conditions.
c. A placard on each berth must require that these restraints be fastened when occupied.
d. If compliance with any of the other requirements of these special conditions predicates a specific head position, a placard must identify that head position.
9.
a. Two PBE devices suitable for firefighting, or one PBE for each hand-held fire extinguisher, whichever is greater. All PBE devices must be approved to Technical Standard Order (TSO)-C116 or equivalent.
b. At least one approved, hand-held fire extinguisher appropriate for the kinds of fires likely to occur.
c. One flashlight.
Additional PBE devices and fire extinguishers in specific locations, beyond the minimum numbers prescribed in Special Condition 9, may be required as a result of the egress analysis accomplished to satisfy Special Condition 2(a) of these special conditions.
10.
a. A visual indication to the flight deck within one minute after the start of a fire.
b. An aural warning in the OFAR compartment.
c. An aural or visual warning in the main passenger cabin. This warning must be readily detectable by a flight attendant, taking into consideration the locations of flight attendants throughout the main passenger compartment during various phases of flight.
11.
12.
a. Small quantities of smoke may penetrate from the OFAR compartment into other occupied areas during the one-minute smoke detection time.
b. Firefighting procedures must ensure that crewmembers close all doors and hatches at the OFAR compartment outlets after evacuation of the compartment and during firefighting to minimize smoke and extinguishing agent entering other occupiable compartments.
c. Hazardous quantities of smoke may not enter any occupied compartment while a crewmember accesses an OFAR compartment to manually fight a fire there. The amount of smoke entrained by a crewmember exiting the OFAR compartment is not considered a hazardous amount.
d. Smoke entering any occupiable compartment, when access to the OFAR compartment is open for evacuation, must dissipate within five minutes after the access to the OFAR compartment is closed.
e. The applicant must conduct flight tests to show compliance with this requirement.
13.
a. At least one oxygen mask for each seat and berth in the OFAR compartment.
b. If a destination area, such as a changing area, is provided in the OFAR compartment, an oxygen mask must be readily available for each occupant who can reasonably be expected to be in the destination area. The maximum number of required oxygen masks within the destination area is limited to the placarded maximum occupancy of the OFAR compartment.
c. An oxygen mask must be readily accessible to each occupant who can reasonably be expected to be moving from the main cabin into the OFAR compartment, moving around within the OFAR compartment, or moving from the OFAR compartment to the main cabin.
d. The supplemental oxygen system must provide an aural and visual alert to warn occupants of the OFAR compartment to don oxygen masks in the event of decompression.
(1) The aural and visual alerts must activate concurrently with deployment of the oxygen masks in the passenger cabin.
(2) To compensate for sleeping occupants, the aural alert must be heard in each section of the OFAR compartment and must sound continuously for a minimum of five minutes or until a reset switch within the OFAR compartment is activated.
(3) A visual alert that informs occupants that they must don an oxygen mask must be visible in each section.
e. A means must be in place by which oxygen masks in the OFAR compartment can be manually deployed from the flight deck.
f. The applicant must establish approved procedures for OFAR occupants in the event of decompression. These procedures must be provided to the operator for incorporation into its training programs and appropriate operational manuals.
g. The supplemental oxygen system for the OFAR compartment must meet the same 14 CFR part 25 regulations for the supplemental oxygen system for the passenger cabin occupants, except for the 10 percent additional masks requirement of 14 CFR 25.1447(c)(1).
h. The illumination level of the normal OFAR compartment lighting system must automatically be sufficient for each occupant of the compartment to locate a deployed oxygen mask.
14.
a. A placard is required adjacent to each curtain that visually divides or separates the OFAR compartment into smaller sections. The placard must require that the curtain(s) remains open when that section is unoccupied. The vestibule section adjacent to the stairway is not considered a private section and, therefore, does not require a placard.
b. For each section of the OFAR compartment created by the installation of a curtain, the following requirements of these special conditions must be met with the curtain open or closed:
(1) No-smoking placard (Special Condition 1),
(2) Emergency illumination (Special Condition 5),
(3) Aural emergency alarm system (Special Condition 7),
(4) Seatbelt-fasten signal or return-to-seat signal as applicable (Special Condition 8),
(5) Smoke or fire detection system requirement (Special Condition 10), and
(6) Oxygen system (Special Condition 13).
c. OFAR compartments that are divided by curtains to the extent that evacuation could be adversely affected must have exit signs directing occupants to the primary stairway outlet. The exit signs must be provided in each separated section of the OFAR compartment, except for curtained bunks, and must meet the requirements of § 25.812(b)(1)(i). An exit sign with reduced background area or a symbolic exit sign, as described in Special Condition 4(a), may be used to meet this requirement.
d. For OFAR compartments that are divided using an installation of a rigid partition with a door separating the sections, the following requirements of these special conditions must be met with the door open or closed:
(1) A secondary evacuation route from each section to the main deck is required, or alternatively, the applicant must show that any door between the sections precludes anyone from being trapped inside a section of the compartment. The applicant must consider removal of an incapacitated occupant from within this area. A secondary evacuation route from a small room designed for only one occupant for a short time duration, such as a changing area or lavatory, is not required, but the applicant must consider removal of an incapacitated occupant from within such a small room.
(2) Any door between the sections must be shown to be openable when crowded against, even when crowding occurs at each side of the door.
(3) No more than one door may be located between any seat or berth and the primary stairway door.
(4) In each section, exit signs meeting requirements of § 25.812(b)(1)(i), or shown to have an equivalent level of safety, must direct occupants to the primary stairway outlet. An exit sign with reduced background area or a symbolic exit sign, as described in Special Condition 4(a), may be used to meet this requirement.
(5) Special Conditions 1 (no-smoking placards), 5 (emergency illumination), 7 (emergency alarm system), 8 (fasten-seatbelt signal or return to seat signal as applicable), 10 (smoke or fire detections system), and 13 (oxygen system) must be met with the door open or closed.
(6) Special Condition 6 (two-way voice communication) and 9 (Emergency firefighting and protective equipment) must be met independently for each separate section except for lavatories or other small areas that are not intended to be occupied for extended periods of time.
15.
16.
17.
18.
a.
b.
(1) A visual indication to the flight deck within one minute after the start of a fire.
(2) An aural warning in the OFAR compartment.
(3) A warning in the main passenger cabin. This warning must be readily detectable by a flight attendant, taking into consideration the locations of flight attendants throughout the main passenger compartment during various phases of flight.
c. Stowage compartment liner.
(1) If the material used in constructing the stowage compartment meets the flammability requirements of a liner for a Class B cargo compartment (§ 25.855 at Amendment 25-116, and Appendix F, part I, paragraph (a)(2)(ii)), then no liner is required for enclosed stowage compartments equal to or greater than 25 ft
(2) For all enclosed stowage compartments equal to or greater than 57 ft
d.
In rule document 2020-03280, appearing on pages 10052 through 10053 in the issue of Friday, February 21, 2020 make the following correction.
On page 10053, in the table, on the final line, “(Lat. 44°26′24.30″ N, long. 98°18′39.89″ W)” should read “(Lat. 44°26′24.30″ N, long. 98°18′39.89″ W)”.
Internal Revenue Service (IRS), Treasury.
Final regulations; correction.
This document contains corrections to final regulations (TD 9885) that were published in the
This correction is effective on February 28, 2020 and is applicable on December 6, 2019.
Concerning § 1.6038A-1, Brad McCormack or Anand Desai at (202) 317-6939 (not toll-free numbers).
The final regulations (TD 9885) that are the subject of this correction are under section 1.6038A of the Internal Revenue Code.
As published the final regulations (TD 9885) contain errors that may prove to be misleading and are in need of clarification.
Accordingly, the final regulations (TD 9885), that are subject of FR Doc. 2019-25744, published on December 6, 2019 (84 FR 66968), are corrected as follows:
1. On page 66997, in the third column, the last line from the bottom of the last full paragraph, the language “years beginning Monday” is corrected to read “years beginning on or after Monday”.
2. On page 67007, in the third column, the second line of the second full paragraph, the language “taxable years beginning Monday” is corrected to read “taxable years beginning on or after Monday”.
Department of Defense.
Final rule.
This final rule removes an unnecessary and outdated Department of Defense (DoD) rule relating to a health promotion program. The majority of the content of this part includes internal DoD policy, which does not require rulemaking. Additionally, since this rule was codified, the General Services Administration (GSA) issued a rule that superseded the public-facing content of this part. Therefore, this part can be removed from the CFR.
This rule is effective on February 28, 2020.
Donald Shell, MD, MA, Director, Disease Prevention, Disease Management and Population Health, OASD (HA) Health Services Policy and Oversight, Email:
This final rule removes an unnecessary and outdated Department of Defense (DoD) regulation on a health promotion program, which was last updated August 30, 1988 (53 FR 33123). The DoD program continues to operate under the existing internal policies, the General Services Administration (GSA) has since issued a rule that superseded the public-facing content of this part.
Internal policies are available in DoD Instruction (DoDI) 1010.10, “Health Promotion and Disease Prevention” (available at:
The rule also sets forth an outdated smoking policy on DoD property. However, since codification of this part, GSA issued a rule at title 41 CFR part 102-74, “Facility Management” (70 FR 67798, Nov. 8, 2005), which regulates smoking policies for the executive branch of the government and superseded this part.
Part 85 should now be removed as its content is either internal or obsolete. This rule is not significant under Executive Order (E.O.) 12866, “Regulatory Planning and Review,” therefore, the requirements of E.O. 13771, “Reducing Regulation and Controlling Regulatory Costs” do not apply.
Government employees, Health.
Under Secretary of Defense for Personnel and Readiness, Department of Defense.
Interpretive rule.
The Department of Defense (Department) is amending its interpretive rule for the Military Lending Act (the MLA). The MLA, as implemented by the Department, limits the military annual percentage rate (MAPR) that a creditor may charge to a maximum of 36 percent, requires certain disclosures, and provides other substantive consumer protections on “consumer credit” extended to Service members and their families. On July 22, 2015, the Department amended its regulation primarily for the purpose of extending the protections of the MLA to a broader range of closed-end and open-end credit products (the July 2015 Final Rule). On August 26, 2016, the Department issued the first set of interpretations of that regulation in the form of questions and answers. On December 14, 2017, the Department issued a second set of interpretations of that regulation in the form of amended questions and answers. The Department is now withdrawing the amended question and answer number 2 (Q&A #2), published in the December 14, 2017 Interpretive Rule, which discussed when credit is extended for the purpose of purchasing a motor vehicle or personal property and the creditor simultaneously extends credit in an amount greater than the purchase price of the motor vehicle or personal property. In withdrawing this amended question and answer, the Department is reverting back to the original Q&A #2 published in the August 26, 2016 Interpretive Rule. This will allow the Department to conduct additional analysis on this matter. The Department is also adding a new question and answer to address questions about the use of Individual Taxpayer Identification Numbers to identify covered borrowers in the Department's database.
Andrew Cohen, 703-692-5286.
In July 2015, the Department of Defense (Department) issued a final rule
Subsequently, the Department received requests to clarify its interpretation of points raised in the July 2015 Final Rule. In an effort to assist industry in complying with the July 2015 Final Rule, the Department elected to answer these requests through an interpretive rule in the form of questions and answers. The Department issued the first set of such interpretations on August 26, 2016 (August 26, 2016 Interpretive Rule).
The present interpretive rule amends and adds to those questions and answers. Subsequent to the publication of the December 14, 2017 Interpretive Rule, the Department received several formal requests for the Department to withdraw the amended Q&A #2 from the December 14, 2017 Interpretive Rule.
This amended interpretive rule does not change the regulation implementing the MLA, but merely states the Department's preexisting interpretations of an existing regulation. Therefore, under 5 U.S.C. 553(b)(A), this rulemaking is exempt from the notice and comment requirements of the Administrative Procedure Act, and, pursuant to 5 U.S.C. 553(d)(2), this rule is effective immediately upon publication in the
The following questions and answers represent official interpretations of the Department on issues related to 32 CFR part 232. For ease of reference, the following terms are used throughout this document: MLA refers to the Military Lending Act (codified at 10 U.S.C. 987); MAPR refers to the military annual percentage rate, as defined in 32 CFR 232.3(p).
In order to provide further guidance to industry and the public on the Department's view of its existing regulation, the Department is amending its guidance on one question and answer, and by adding one new question and answer.
The numbering of this document follows the numbering of the questions and answers provided in the August 26, 2016 and December 14, 2017 Interpretive Rules. The text of the amended and new questions and answers follows:
Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563
This rule is exempt from the requirements of Executive Order 13771 because it results in no more than de minimis costs.
This rule does not impose reporting and record keeping requirements under the Paperwork Reduction Act of 1995.
Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a special local regulation on the waters of Bahia De Rincon, Puerto Rico during the Salinas Power Boat Race. Approximatly 50 high speed boats and personal water crafts are expected to participate in the race. The special local regulation is necessary to ensure the safety to race participants, participant vessels, and the general pubic during the event. The special local regulation establishes a race area, where all persons and vessels, except those participating in the race, will be prohibited from entering, transiting through, anchoring in, or remaining within unless authorized by the Captain of the Port San Juan or a designated representatives.
This rule is effective daily from 6 a.m. until 6 p.m. on Febuary 29, 2020 and March 1, 2020.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email LCDR Pedro L. Mendoza, Waterways Management division, U.S. Coast Guard; telephone 787-691-7058, email
The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because it is impracticable. The Coast Guard did not receive the necessary information to publish notice for this event until January 28, 2020, which is 32 days before the event is scheduled to occur. Any delay in the effective date of this rule would be contrary to the public interest because immediate action is needed to minimize potential danger to the race participants, participating vessels, spectators and the general public. It is impracticable to publish an NPRM because we must establish this special local regulation by Febuary 28, 2020.
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The Captain of the Port San Juan (COTP) has determined that potential hazards associated with the event will be a safety concern for anyone in the area. This rule is needed to ensure safety of life on navigable waters of the United States during the event.
This rule extablishes a special local regulation daily from 6 a.m. until 6 p.m. on Febuary 29, 2020 and March 1, 2020. The municipality of Salinas and the Caribbean Power Boat Association is sponsoring the Salinas Power Boat Championship—a high speed power boat and personal water craft (PWC) race in the waters near Salinas, Puerto Rico. Approximately 50 high speed boats and PWC's are expected to participate in the races.
The special local regulation encompasses certain waters of the Municipality of Salinas, Puerto Rico in Bahia de Rincon, and will consist of one large area in which there will be: One race area for high-speed power boats, once race area for PWC's and a buffer area. All persons and vessels, except those persons and vessels participating in the race or enforcing the special local regulation, are prohibited from entering, transiting through, anchoring in, or remaining within the area. Persons and vessels may request authorization to enter, transit through, anchor in, or remain within the race area by contacting the Captain of the Port San Juan by telephone at 787-289-2041, or a designated representative via VHF radio on channel 16. If authorization is granted by the Captain of the Port San Juan or a designated representative, all persons and vessels receiving such authorization must comply with the instructions of the Captain of the Port San Juan or a designated representative. The Coast Guard will provide notice of the regulated area by Broadcast Notice to Mariners, and on-scene designated representatives.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a
This regulatory action determination is based on: (1) The special local regulation will be enforced for twelve hours daily over a two day period; (2) although persons and vessels will not be able to enter, transit through anchor in, or remain within the race area, without authorization from the Captain of the Port San Juan or a designated representative, they may operate in the surrounding area during the enforcement period; (3) persons and vessels may still enter, transit through, anchor in, or remain within the race area, during the enforcement period. If authorized by the Captain of the Port San Juan or a designated representative; and (4) the Coast Guard will provide advance notification of the special local regulation to the local maritime community by Broadcast Notice to Mariners.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the special local regulation may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves creation of a special local regulation in conjunction with a regatta or marine parade to ensure the safety of race participants, participant vessels and the general public during the event. It is categorically excluded from further review under paragraph L61 of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the
Marine safety, Navigation (water), Reporting and recordkeeping requirements, Waterways.
46 U.S.C. 70041; 33 CFR 1.05-1.
(a)
(1)
(b)
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(2) The Coast Guard will provide notice of the regulated area by Broadcast Notice to Mariners, and on-scene designated representatives.
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Coast Guard, DHS.
Temporary final rule.
The Coast Guard is establishing a temporary safety zone for navigable waters within a 50-yard radius of USCG Station Juneau. The safety zone is needed to protect personnel, vessels, and the marine environment from potential hazards created by a Navy test involving remotely operated vehicles (ROVs) with a tethered cable which could tangle in a boat's prop. Entry of vessels or persons into this zone is prohibited unless specifically authorized by the Captain of the Port Southeast Alaska.
This rule is effective between 7:30 a.m. and 5 p.m. from February 25, 2020, through February 29, 2020. For the purposes of enforcement, actual notice will be used from February 19, 2020, through February 28, 2020.
To view documents mentioned in this preamble as being available in the docket, go to
If you have questions on this rule, call or email LT Jesse Collins, Sector Juneau Waterways Management Division, U.S. Coast Guard; telephone 907-463-2846, email
The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because immediate action is needed to safeguard the boating public. It is impracticable to publish an NPRM because immediate action is necessary to protect the public.
Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the
The Coast Guard is issuing this rule under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231). The Captain of the Port Southeast Alaska (COTP) has determined that potential hazards associated with the Navy's operation starting February 25, 2020, will be a safety concern for anyone within a 50-yard radius of USCG Station Juneau. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone while the Navy operation is in effect.
This rule establishes a safety zone from 8 a.m. on February 25, 2020 until 4 p.m. on February 29, 2020. The safety zone will cover all navigable water within 50 yards of USCG Station Juneau. The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters while the Navy operation is in effect. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative.
We developed this rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, this rule has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.
This regulatory action determination is based on the size, location, duration,
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the
Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.
This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves a safety zone lasting 7 hours per day that will prohibit entry within 50 yards of USCG Station Juneau. It is categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to call or email the person listed in the
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:
46 U.S.C. 70034, 70051; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
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(2) To seek permission to enter, contact the COTP or the COTP's
(3) Those in the safety zone must comply with all lawful orders or directions given to them by the COTP or the COTP's designated representative.
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Office of Special Education and Rehabilitative Services, U.S. Department of Education.
Policy interpretation; request for comments.
The U.S. Department of Education (Department) issues this interpretation to clarify current policy and announce a change in policy regarding the use of Federal vocational rehabilitation (VR) funds reserved for pre-employment transition services.
This policy is effective February 28, 2020. We must receive your comments on or before March 30, 2020.
Submit your comments through the Federal eRulemaking Portal or via postal mail, commercial delivery, or hand delivery. We will not accept comments submitted by fax or by email or those submitted after the comment period. To ensure that we do not receive duplicate copies, please submit your comments only once. In addition, please include the Docket ID at the top of your comments.
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The Department's policy for comments received from members of the public is to make these submissions available for public viewing in their entirety on the Federal eRulemaking Portal at
Carol Dobak, U.S. Department of Education, 400 Maryland Avenue SW, Room 5153, Potomac Center Plaza, Washington, DC 20202-5108. Telephone: (202) 245-7325. Email:
We invite you to submit comments on this notice of interpretation. We will consider these comments in determining whether to take any future action.
See
During and after the comment period, you may inspect all public comments about this interpretation by accessing
The Department published a request for comments in the
The Rehabilitation Act of 1973, as amended by title IV of the Workforce Innovation and Opportunity Act (Rehabilitation Act), requires States to reserve at least 15 percent of their VR program allotments to provide, or arrange for the provision of, pre-employment transition services to all students with disabilities in need of such services who are eligible or potentially eligible for the VR program. In response to the many questions and comments about the allowable use of the reserved funds for auxiliary aids and services and other VR services listed in the Rehabilitation Act, the Department issues this notice of interpretation to: (1) Clarify current policy regarding the use of Federal VR funds reserved for the provision of pre-employment transition services to pay for auxiliary aids and services needed by all students with disabilities in order to access or participate in required pre-employment transition services under section 113(b) of the Rehabilitation Act, and (2) announce a change in policy with respect to additional VR services needed by eligible students with disabilities that may be paid for with Federal VR grant funds reserved for the provision of pre-employment transition services and the circumstances under which those funds may be used to pay for those additional VR services.
The amendments to the Rehabilitation Act made by title IV of the Workforce Innovation and Opportunity Act (WIOA) place heightened emphasis on the provision of services to students and youth with disabilities to ensure that they have meaningful opportunities to receive the training and other services they need to achieve employment outcomes in competitive integrated employment. The Rehabilitation Act, as amended by WIOA, expands not only the population of students with disabilities who may receive services under the VR program but also the kinds of services the designated State units
Most notably, section 110(d)(1) of the Rehabilitation Act and 34 CFR 361.65(a)(3)(i) require States to reserve at least 15 percent of their Federal VR grant for the provision of pre-employment transition services. Section 113(a) of the Rehabilitation Act and 34 CFR 361.48(a) require DSUs for the VR program to use the reserved funds to provide, or arrange for the provision of, pre-employment transition services to all students with disabilities in need of such services who are eligible or potentially eligible for services under the VR program.
Section 113(b) of the Rehabilitation Act and 34 CFR 361.48(a)(2) list the five required pre-employment transition services that DSUs, in collaboration with local educational agencies (LEAs), must make available to students with disabilities in need of these services. These services are—
• Job exploration counseling;
• Work-based learning experiences, which may include in-school or after school opportunities, or experience outside the traditional school setting (including internships), that are provided in an integrated environment to the maximum extent possible;
• Counseling on opportunities for enrollment in comprehensive transition or postsecondary educational programs at institutions of higher education;
• Workplace readiness training to develop social skills and independent living; and
• Instruction in self-advocacy, which may include peer mentoring.
Pre-employment transition services represent the earliest set of services available for students with disabilities under the VR program, are short-term in nature, and are designed to help students identify career interests.
For purposes of this notice of interpretation, the Department focuses its discussion on these five required pre-employment transition services because these are the only pre-employment transition services that DSUs provide directly to students with disabilities as defined in section 7(37) of the Rehabilitation Act and 34 CFR 361.5(c)(51).
Since implementation of the pre-employment transition services requirements, the Department has continued to receive comments from DSUs and other stakeholders regarding: (1)The need for further clarification about the extent to which funds reserved for the provision of pre-employment transition services may be used to pay for auxiliary aids and services; and (2) the ability of States to reserve and expend at least 15 percent of their VR grant allotments on the provision of pre-employment transition services under the Department's general interpretation of the statutory requirements related to the allowable use of funds. Specifically, DSUs and stakeholders have asked if funds reserved for pre-employment transition services may be used to cover the costs of auxiliary aids and services provided directly to students with disabilities as well as other VR services, such as transportation, tuition for postsecondary education, rehabilitation technology, and job coaching. The Department addresses these concerns in this notice of interpretation.
Subsequent to the publication of the State Vocational Rehabilitation Services program; State Supported Employment Services program; and Limitations on Use of Subminimum Wage regulations in the
As public entities, defined in section 12131 of the Americans with Disabilities Act (ADA), and as recipients of Federal funds, DSUs must ensure that no qualified individual with a disability is excluded from participation in or denied the benefits of services, programs, or activities on the basis of the individual's disability (section 12132 of the ADA and section 504(a) of the Rehabilitation Act). Because section 113(a) of the Rehabilitation Act and 34 CFR 361.48(a) make clear that pre-employment transition services must be provided to all students with disabilities who need them, this means that both eligible and potentially eligible students with disabilities meet the essential eligibility requirements
The ADA's title II implementing regulations define “auxiliary aids and services” in 28 CFR 35.104. For purposes of the Department's policy interpretation, auxiliary aids and services ensure equal access to information, materials, services, and activities available to students with disabilities participating in pre-employment transition services. As such, expenditures incurred for the purchase or acquisition of auxiliary aids and services, including, for example, interpreter and reader services under section 103(a)(10) of the Rehabilitation Act and 34 CFR 361.48(b)(10) and (11), for students with disabilities needing such aids or services to access or participate in pre-employment transition services specified in section 113(b) of the Rehabilitation Act and 34 CFR 361.48(a)(2) constitute an allowable pre-employment transition services cost. This is true for both potentially eligible and eligible students with disabilities.
Because auxiliary aids and services necessary for students with disabilities to access or participate in pre-employment transition services are an allowable cost, DSUs may use funds reserved for providing pre-employment transition services to pay for those auxiliary aids and services for any student with a disability who needs them, regardless of whether they have applied and been determined eligible for VR services. For example, for a student who is deaf, DSUs could purchase interpreter services or video-based telecommunication products to ensure access to information and activities related to job exploration counseling or other pre-employment transition services. As another example, DSUs could purchase screen reader software programs to enable a student who is blind to access information on a computer during a work-based learning experience. DSUs could purchase the screen reader software for the student's personal laptop or for a laptop that would be available for other students needing the device. In these instances, it is important to note that the screen reader software for individuals who are blind or visually impaired, not the computer on which it is installed, meets the definition of “auxiliary aids and services” for purposes of the ADA and section 504 of the Rehabilitation Act and, as such, could be paid with funds reserved for the provision of pre-employment transition services. The Department addresses computers and other rehabilitation technology in a later discussion pertaining to section 103(a)(14) of the Rehabilitation Act and 34 CFR 361.48(b)(17).
On the other hand, personal devices and services do not meet the definition of auxiliary aids and services under the ADA or section 504 of the Rehabilitation Act. Personal devices and services include individually prescribed devices, such as prescription eyeglasses or hearing aids, readers for personal use or study, or services of a personal nature (28 CFR 35.135 and 34 CFR 104.44(d)(2)). If a student with a disability requires personal devices or services or individually prescribed assistive technology, the VR agency must determine whether the student meets the eligibility criteria of section 102(a) of the Rehabilitation Act and, if so, develop an IPE in partnership with the student pursuant to section 102(b) of the Rehabilitation Act for the provision of those additional services (see also 34 CFR 361.42(a)(1) and 361.45). DSUs must use funds reserved under section 110(d)(1) of the Rehabilitation Act and 34 CFR 361.65(a)(3)(i) to pay for only pre-employment transition services under section 113(b) and 34 CFR 361.48(a)(2), auxiliary aids and services needed by any student with a disability to access or participate in those services, or other VR services necessary for an eligible student to receive pre-employment transition services as discussed elsewhere in this notice of interpretation. DSUs must pay for any other additional VR services using non-reserved VR funds.
As explained here for purposes of this policy interpretation, which is separate and distinct from the policy clarification just described regarding auxiliary aids and services, DSUs may use the funds reserved under section 110(d)(1) of the Rehabilitation Act and 34 CFR 361.65(a)(3)(i) to pay for those pre-employment transition services needed by eligible students with disabilities, plus any other VR service needed by those eligible students to benefit from pre-employment transition services in accordance with an approved IPE. With respect to those students with disabilities who have not yet been determined eligible for the VR program (
Since the addition of the five required pre-employment transition services, the VR program can be characterized as providing a continuum of services, with pre-employment transition services being most beneficial to students with disabilities in the early stages of employment exploration. The Secretary is committed to ensuring that students with disabilities are held to high expectations and have the resources and supports needed to prepare them for success in postsecondary education or careers. Therefore, we believe that these services should be provided to the broadest population of students with disabilities to ensure that as many students with disabilities as possible are able to receive the services they need to prepare for postschool activities, including postsecondary education and employment. To that end, pre-employment transition services represent the earliest set of services available for students with disabilities under the VR program. These are short-term services designed to help students identify career interests.
Transition services represent the next set of services on the continuum of VR services available to eligible individuals. Transition services, for eligible students
Employment-related services to eligible individuals are next in the continuum of services. These services typically are provided once eligible
While a continuum of services across pre-employment transition services for students with disabilities, and transition services and employment-related services for eligible individuals who have IPEs, exists under the VR program, the five required pre-employment transition services are the only services available to potentially eligible students with disabilities.
In the preamble to the Department's August 2016 regulations, the Department made clear that the term “potentially eligible” students with disabilities, for purposes of receiving pre-employment transition services, includes all students with disabilities (81 FR 55630, 55631, and 55690-55691). Students with disabilities do not need to apply and be determined eligible for the VR program to receive pre-employment transition services. However, these students may not receive any VR services other than pre-employment transition services until they apply, and are determined eligible, for VR services, and have an approved IPE (81 FR 55629 at 55691). On the other hand, eligible students with disabilities, that is, those students who have applied and been determined eligible for the VR program, are able to receive any VR services, including pre-employment transition services, necessary to assist them in achieving their employment outcome, so long as those services are identified on their IPEs in accordance with section 103(a) of the Rehabilitation Act (81 FR 55691).
On May 21, 2014, the Congress of the United States released “Statement of the Managers to Accompany the Workforce Innovation and Opportunity Act.” In its statement, Congress made clear that the title IV “. . . amendments established a framework to ensure every young person with a disability, regardless of their level of disability, has the opportunity to experience competitive, integrated employment. The pre-employment transition services will provide young people with disabilities with the opportunity to develop their skills and to use supports, available through State VR programs to experience competitive integrated employment as they leave school and enter the workforce.” The intent of Congress makes clear that the “framework” for VR services includes pre-employment transition services for all students with disabilities and other services and supports for eligible students with disabilities with an approved IPE to develop their skills and experience success when they enter the workforce.
Section 110(d)(1) of the Rehabilitation Act and 34 CFR 361.65(a)(3)(i) require each State to reserve at least 15 percent of its Federal VR grant for the provision of pre-employment transition services to students with disabilities. With this statutory provision, coupled with the “Statement of the Managers to Accompany the Workforce Innovation and Opportunity Act,” the Department interprets this requirement as meaning that DSUs may use these reserved funds to pay for other VR services under section 103(a) of the Rehabilitation Act and 34 CFR 361.48(b), in accordance with an approved IPE, that are necessary for an eligible student with a disability to participate in pre-employment transition services identified in section 113(b) of the Rehabilitation Act. This means that, for eligible students with disabilities, DSUs may use the reserved funds to pay for the pre-employment transition services and any other VR services necessary for the eligible student to benefit from those pre-employment transition services in accordance with an approved IPE consistent with the requirements of section 103(a) of the Rehabilitation Act. However, for those students with disabilities who have not yet applied or been determined eligible for the VR program (
Although section 113 of the Rehabilitation Act is unique in that it permits VR agencies to provide pre-employment transition services to students with disabilities who have not yet been determined eligible for the VR program, section 103(a) of the Rehabilitation Act does not contain the same flexibility. Section 103(a) of the Rehabilitation Act makes clear that all VR services provided under that section are provided under an approved IPE that is developed when an individual with a disability has applied and been determined eligible for the VR program in accordance with section 102 of the Rehabilitation Act (see also 34 CFR 361.42 and 361.48(b)).
Section 102(b)(4)(A) of the Rehabilitation Act and 34 CFR 361.46(a)(1) make clear that the IPE for a student with a disability need only contain a “description of the student's projected postschool employment outcome,” as opposed to a description of a specific employment outcome. Despite this flexibility available to States, the Department has observed through monitoring that these IPEs for students with disabilities are underutilized. Because DSUs can develop initial IPEs for eligible students with disabilities that are more general in nature, DSUs are able to provide additional supports and services to eligible students as necessary for students to benefit from pre-employment transition services and activities and explore their career interests and, subsequently, refine the IPEs, through the amendment process under section 102(b)(3)(E) of the Rehabilitation Act and 34 CFR 361.45(a)(6), to include a specific employment goal and the VR services necessary to achieve that goal, as appropriate. Eligible students with disabilities are able to access any other VR services needed to participate in pre-employment transition services (as discussed in more detail below) or other VR services that are unrelated to pre-employment transition services, none of which would be available to them without approved IPEs.
This policy interpretation applies only to those students with disabilities who have been determined eligible for services under the VR program and who have an approved IPE. We recognize that some eligible students with disabilities may need certain VR services under section 103(a) of the Rehabilitation Act and 34 CFR 361.48(b) to fully benefit from pre-employment transition services under section 113(b) and 34 CFR 361.48(a)(2). Receiving other VR services and supports, along with the pre-employment transition services, enables eligible students with a disability to develop the skills to experience competitive, integrated employment as they leave school and enter the workforce. Therefore, the Department believes that allowing the funds reserved under section 110(d)(1) and 34 CFR 361.65(a)(3)(i) to be used to
This interpretation regarding the use of the reserved funds for certain other VR services that are necessary for an eligible student with a disability to benefit from pre-employment transition services also is consistent with the Office of Management and Budget's Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), codified at 2 CFR part 200. Specifically, 2 CFR 200.403(a) requires that costs paid from a Federal award must be allowable, meaning that they must be necessary, reasonable, and allocable to the award. Costs are reasonable if, in their nature and amount, they do not exceed that which would be incurred by a prudent person under the circumstances that existed at the time the decision was made to incur the cost (2 CFR 200.404). A cost is allocable to a Federal cost objective if the services are assignable to that cost objective in accordance with relative benefits received (2 CFR 200.405(a)). These fiscal requirements not only apply to costs incurred under the VR grant as a whole, but also to those costs incurred with the funds reserved under section 110(d)(1) of the Rehabilitation Act and 34 CFR 361.65(a)(3)(i). In other words, costs incurred with these reserved funds must be—
• Necessary for the provision or receipt of pre-employment transition services;
• Reasonable, that is, those that a prudent person would agree are necessary for the provision or receipt of pre-employment transition services; and
• Allocable, that is, those that benefit the provision or receipt of pre-employment transition services.
Under the Department's interpretation, the reserved funds may be used for costs associated with providing certain VR services to eligible students with disabilities, in accordance with approved IPEs, who need those services to benefit from pre-employment transition services, as well as the costs associated with the pre-employment transition services themselves. As such, these costs would be reasonable, necessary, and allocable to the funds reserved under section 110(d)(1) of the Rehabilitation Act and 34 CFR 361.65(a)(3)(i). If eligible students with disabilities need additional VR services that are not within the scope of pre-employment transition services and, thus, this interpretation, DSUs may still provide those services in accordance with the terms of the approved IPE. However, DSUs must provide those additional VR services with other VR funds that were not reserved under section 110(d)(1) of the Rehabilitation Act and 34 CFR 361.65(a)(3)(i).
In an effort to explain the application of this interpretation to the services outlined in section 103(a) of the Rehabilitation Act and 34 CFR 361.48(b), we discuss each of those VR services in light of whether they are within the nature, scope, and purpose of any of the pre-employment transition services available under section 113(b) and 34 CFR 361.48(a)(2) (
Through this interpretation, the following VR services in section 103(a) of the Rehabilitation Act and 34 CFR 361.48(b) fall within the nature, scope, and purpose of pre-employment transition services when needed by an eligible student with a disability, in accordance with an approved IPE, to benefit from one or more of the pre-employment transition services described in section 113(b) of the Rehabilitation Act and 34 CFR 361.48(a)(2). As such, costs incurred in providing these other VR services are allocable to the funds reserved under section 110(d)(1) of the Rehabilitation Act and 34 CFR 361.65(a)(3)(i). As discussed here, the examples of when DSUs may use the reserved funds to pay for additional services in section 103(a) of the Rehabilitation Act and 34 CFR 361.48(b), consistent with both the statutory purpose for these reserved funds and fiscal requirements of the Uniform Guidance, provide DSUs with significantly greater flexibility in delivering pre-employment transition services to eligible students with disabilities than has been allowed under Department guidance issued to date, thereby increasing the availability of pre-employment transition services to these students.
To the extent that a portion of the costs incurred for the additional VR services fall outside the nature, scope, and purpose of pre-employment transition services, DSUs must pay that portion with other VR program funds.
Section 103(a)(1) and 34 CFR 361.48(b)(2) permit DSUs to provide assessment services to eligible individuals to determine VR needs. These services are generally provided in the very early stages of the VR process with an eligible individual with a disability and, thus, are consistent with the nature, scope, and purpose of pre-employment transition services. As stated in the preamble to the August 2016 regulations (81 FR at 55685), VR services are provided on a continuum, with pre-employment transition services being the earliest set of services available for students with disabilities. Given that the purpose of assessment services under section 103(a)(1) and 34 CFR 361.48(b)(2) is to determine the VR needs of individuals with disabilities, it is reasonable that an eligible student with a disability would need further assessment services while engaging in any of the pre-employment transition services set forth at section 113(b) and 34 CFR 361.48(a)(2) to fully benefit from those activities.
Section 103(a)(2) and 34 CFR 361.48(b)(3) permit DSUs to provide counseling and guidance services to eligible individuals throughout the VR process. These services are directly connected with the nature, scope, and purpose of two pre-employment transition services, specifically job exploration counseling (section 113(b)(1) and 34 CFR 361.48(a)(2)(i)) and counseling on opportunities for enrollment in comprehensive transition and other postsecondary education programs at institutions of higher education (section 113(b)(3) and 34 CFR 361.48(a)(2)(iii)). Given that counseling and guidance services are specifically listed among the pre-employment
Section 103(a)(3) and 34 CFR 361.48(b)(4) permit DSUs to provide referral services to eligible individuals with disabilities to secure needed services from other agencies throughout the VR process. While these services are not directly connected to any particular pre-employment transition services activity described in section 113(b) and 34 CFR 361.48(a)(2), section 113(a) of the Rehabilitation Act and 34 CFR 361.48(a) make clear that the VR agency must provide, or arrange for the provision of, pre-employment transition services to students with disabilities in need of such services. The Rehabilitation Act clearly envisioned circumstances in which the DSU itself would not be able to provide the pre-employment transition services and would need to reach agreements with other entities to provide those services. As such, it is reasonable that an eligible student with a disability could need a referral in order to participate in one or more of the pre-employment transition services set forth in section 113(b) of the Rehabilitation Act and 34 CFR 361.48(a)(2). In this circumstance, the referral services under section 103(a)(3) and 34 CFR 361.48(b)(4) for that eligible student with a disability would fall squarely within the nature, scope, and purpose of pre-employment transition services.
Section 103(a)(7) and 34 CFR 361.48(b)(7) permit DSUs to provide maintenance to eligible individuals with disabilities to cover additional costs incurred while receiving VR services. DSUs may provide maintenance to eligible individuals with disabilities throughout the VR process, including during the early stages in the continuum of VR services. Maintenance is unique from most other VR services listed in section 103(a) and 34 CFR 361.48(b) because it must be provided in combination with another VR service, such as pre-employment transition services. It is reasonable that an eligible student with a disability who is participating in pre-employment transition services could incur additional costs to participate in those services (
Section 103(a)(8) and 34 CFR 361.48(b)(8) permit DSUs to provide transportation services, including training in the use of public transportation, to eligible individuals with disabilities throughout the VR process. As with the maintenance services just described, DSUs must provide transportation services only in combination with another VR service, such as pre-employment transition services. It is reasonable that an eligible student with a disability who is participating in pre-employment transition services could need transportation services to benefit from any of the pre-employment transition services described in section 113(b) of the Rehabilitation Act and 34 CFR 361.48(a)(2) (
Section 103(a)(9) and 34 CFR 361.48(b)(14) permit DSUs to provide personal assistance services to eligible individuals with disabilities when needed to participate in another VR service. As with maintenance and transportation services just described, DSUs may provide personal assistance
Section 103(a)(11) and 34 CFR 361.48(b)(11) permit DSUs to provide rehabilitation teaching services and orientation and mobility services to eligible individuals who are blind. These services, particularly the orientation and mobility services, also are offered as pre-employment transition services, namely “workplace readiness” training under section 113(b)(4) of the Rehabilitation Act and 34 CFR 361.48(a)(2). Therefore, it is reasonable and allocable to pre-employment transition services activities for a DSU to use funds reserved under section 110(d)(1) of the Rehabilitation Act and 34 CFR 361.65(a)(3)(i) to pay for these services in the event an eligible student with a disability needs them, in accordance with an approved IPE, to benefit from pre-employment transition services. Because these services actually constitute workplace readiness training under section 113(b)(4) and 34 CFR 361.48(a)(2)(iv), the services under section 103(a)(11) and 34 CFR 361.48(b)(11) clearly fall within the scope, nature, and purpose of pre-employment transition services.
Section 103(a)(14) and 34 CFR 361.48(b)(17) permit DSUs to provide eligible individuals with disabilities rehabilitation technology throughout the VR process when needed and identified on an approved IPE. It is reasonable that an eligible student with a disability, especially a student with a significant disability, could need rehabilitation technology to benefit from pre-employment transition services, particularly those involving work-based learning experiences under section 113(b)(2) and 34 CFR 361.48(a)(2)(ii), workplace readiness training under section 113(b)(4) and 34 CFR 361.48(a)(2)(iv), and self-advocacy training under section 113(b)(5) and 34 CFR 361.48(a)(2)(v). For example, an eligible student with a disability may need an electronic device (that does not constitute an auxiliary aid or service as discussed elsewhere in this notice of interpretation) to participate in one of the pre-employment transition services training activities. In other words, without the rehabilitation technology, the eligible student with a disability might not be able to participate in the pre-employment transition services activity. Under this circumstance, the rehabilitation technology falls within the nature, scope, and purpose of pre-employment transition services under section 113(b) of the Rehabilitation Act and 34 CFR 361.48(a)(2) and, thus, is allocable to those services. However, DSUs must ensure that the costs incurred for the rehabilitation technology are needed by the eligible student with a disability to participate in pre-employment transition services, as opposed to other VR services the eligible student might be participating in simultaneously. Pursuant to 2 CFR 200.403 through 200.405, the DSUs may use the funds reserved under section 110(d)(1) of the Rehabilitation Act and 34 CFR 361.65(a)(3)(i) to pay for the costs of rehabilitation technology that is reasonably allocable to the pre-employment transition services activities of the eligible student with a disability. The DSU must use other VR funds to pay for the portion of the cost, or the entire cost if applicable, that is not allocable to the pre-employment transition services activities.
Section 103(a)(15) and 34 CFR 361.48(b)(18) permit DSUs to provide transition services, including pre-employment transition services, to eligible students with disabilities. For purposes of this interpretation, we discuss transition services separately in a later section. This discussion focuses solely on the pre-employment transition services available under section 103(a)(15) and 34 CFR 361.48(b)(18). As with the orientation and mobility services discussed above, these pre-employment transition services are at the core of the nature, scope, and purpose of the pre-employment transition services provided under section 113(b) of the Rehabilitation Act and 34 CFR 361.48(a)(2). Therefore, it is reasonable and allocable to pre-employment transition services activities for a DSU to use funds reserved under section 110(d)(1) of the Rehabilitation Act and 34 CFR 361.65(a)(3)(i) to pay for these services in the event an eligible student with a disability needs them, in accordance with an approved IPE, to participate in pre-employment transition services under section 113(b) and 34 CFR 361.48(a)(2).
Section 103(a)(19) and 34 CFR 361.48(b)(9) permit the DSU to provide services to family members of an eligible individual with a disability when these services are necessary for the eligible individual to achieve an employment outcome. As with certain other services (
Finally, with respect to those services in section 103(a) of the Rehabilitation Act that fall within the nature, scope, and purpose of pre-employment transition services described in section 113(b) and 34 CFR 361.48(a)(2), the Secretary notes that section 103(a) is not an exhaustive list of services (34 CFR 361.48(b)(21)). DSUs may provide any service that an eligible individual needs to achieve an employment outcome in accordance with an approved IPE. In the context of pre-employment transition services, one such service is coaching services for eligible students with disabilities participating in work-based learning experiences under section 113(b)(2) and 34 CFR 361.48(a)(2)(ii). These coaches perform similar functions as job coaches do in supported employment settings by assisting the eligible student with a disability to perform the tasks assigned during the work-based learning experiences. While these particular coaching services are not specifically listed in section 103(a), they would be considered allowable VR services under section 103(a) and 34 CFR 361.48(b)(21) if needed by an eligible student with a disability, in accordance with an approved IPE, to participate in pre-employment transition services. Given that pre-employment transition services are among the earliest sets of services available to students with disabilities, it is reasonable to expect that these eligible students may need extra assistance through coaching services to participate in these activities. In such circumstances, these coaching services clearly fall within the nature, scope, and purpose of pre-employment transition services, particularly work-based learning experiences under section 113(b)(2) and 34 CFR 361.48(a)(2)(ii), and, thus, would be allocable to those services.
Next, the Secretary believes that the following VR services, set forth in section 103(a) and 34 CFR 361.48(b), have aspects of those services that fall within the nature, scope, and purpose of pre-employment transition services when needed by an eligible student with a disability, in accordance with an approved IPE, to benefit from one or more of the pre-employment transition services described in section 113(b) of the Rehabilitation Act and 34 CFR 361.48(a)(2). In the narrow circumstances described in this notice of interpretation, costs incurred for certain portions of the following services could be allocable to pre-employment transition services under the right set of facts; therefore, in these circumstances, DSUs may pay these costs with the funds reserved under section 110(d)(1) of the Rehabilitation Act and 34 CFR 361.65(a)(3)(i). However, most aspects of the following services fall outside the nature, scope, and purpose of pre-employment transition services and, thus, are not allocable to those services. In those more common circumstances, DSUs may not use funds reserved under section 110(d)(1) and 34 CFR 361.65(a)(3)(i) to pay for those costs.
Section 103(a)(5) and 34 CFR 361.48(b)(6) permit DSUs to provide vocational and other training services, including books, tools, and other training materials, for eligible individuals in accordance with an approved IPE. This provision also permits DSUs to pay for postsecondary education tuition, so long as maximum efforts have been made to obtain grant assistance. Before discussing these services, the Secretary notes that pre-employment transition services are intended to be an early set of exploration services for students with disabilities that are “designed to help students with disabilities to begin to identify career interests that will be further explored through additional [VR] services, such as transition services. Following the continuum, transition services represent the next set of [VR] services available to students with disabilities. They are outcome-oriented and promote movement from school to post-school activities, including postsecondary education, vocational training, and competitive integrated employment. As such, transition services may include job-related services, such as job search and placement assistance, job retention services, follow-up services, and follow-along services based on the needs of the individual” (81 FR at 55685). Given the clear nature, scope, and purpose of pre-employment transition services as a very early set of career interest and exploration services for students with disabilities, the services available under section 103(a)(5) and 34 CFR 361.48(b)(6) are predominately outside that scope. In fact, most of the services fit squarely within the vocational training purpose of transition services for those individuals transitioning from school to a specific employment outcome, as described by the Department at 81 FR at 55685 and, thus, are not allocable to pre-employment transition services. However, an eligible student with a disability could need a book, tool, or other training material to participate in pre-employment transition services, specifically a work-based learning experience under section 113(b)(2) and 34 CFR 361.48(a)(2)(ii). While a DSU could use section 103(a)(7) of the Rehabilitation Act and 34 CFR 361.48(b)(7) as the authority to pay for the book, tool, or training material since it would be an additional cost incurred as a result of the participation in the pre-employment transition services, the DSU also could use the authority of section 103(a)(5) and 34 CFR 361.48(b)(6) to pay the costs of the service. To the extent the book, tool, or training material is necessary for the eligible student with a disability to participate in the work-based learning experience under section 113(b)(2) and 34 CFR 361.48(a)(2)(ii), such service and associated cost would be allocable to pre-employment transition services.
Section 103(a)(18) and 34 CFR 361.48(b)(6) permit DSUs to encourage eligible individuals to pursue advance training in the fields of science, technology, engineering, or mathematics (including computer science), law, medicine, or business. To the extent that a VR counselor or other provider of pre-employment transition services discusses these postsecondary options while discussing all opportunities for enrollment in comprehensive transition and other postsecondary education programs at institutions of higher education under section 113(b)(3) and 34 CFR 361.48(a)(2)(iii), the service under section 103(a)(18) and 34 CFR 361.48(b)(6) is squarely within the nature, scope, and purpose of pre-employment transition services. As such, the service is allocable to pre-employment transition services and could be paid for with funds reserved for that purpose. However, to the extent that the DSU encourages the advanced training under section 103(a)(18) by paying tuition at a postsecondary institution, such service is outside the nature, scope, and purpose of pre-employment transition services and, thus, is not allocable to those services. Once the eligible student has identified this career path and started postsecondary education, the service is one that enables the individual to transition from school to a specific employment outcome, as described at 81 FR at 55685, not simply to explore career interests through pre-employment transition services activities.
Lastly, the Secretary believes that the following VR services, set forth in section 103(a) and 34 CFR 361.48(b), are not allocable to pre-employment transition services in section 113(b) of the Rehabilitation Act and 34 CFR 361.48(a)(2) because they are beyond the nature, scope, and purpose of those services. As such, these services are not allocable to pre-employment transition services, meaning that DSUs may not use funds reserved under section 110(d)(1) and 34 CFR 361.65(a)(3)(i) to pay for those costs even if provided to eligible students with disabilities who are also participating in pre-employment transition services.
Sections 103(a)(4), (5), (15), and (18) permit DSUs to provide eligible individuals with a variety of transition-related services in accordance with an approved IPE (see also 34 CFR 361.48(b)(6) and (12)). As discussed earlier, pre-employment transition services represent the earliest set of services available for students with disabilities. These are short-term services designed to help students identify career interests. In contrast, transition services represent the next set of services on the continuum of VR services to eligible individuals. During the receipt of transition services, eligible students with disabilities further develop and pursue their career interests with postsecondary education, vocational training, job search, job placement, job retention, job follow-up, and job follow-along services. By their very nature, transition-related services are beyond the nature, scope, and purpose of pre-employment transition services set forth at section 113(b) and 34 CFR 361.48(a)(2). For this reason, these services, with narrow exceptions described previously, are not allocable to pre-employment transition services. As such, DSUs may not use funds reserved under section 110(d)(1) and 34 CFR 361.65(a)(3)(i) to pay for these costs. Rather, they must use other VR program funds to pay these costs.
Section 103(a)(6) and 34 CFR 361.48(b)(5) permit DSUs to provide certain medical services to eligible individuals, in accordance with an approved IPE, under certain circumstances. Medical services are beyond the nature, scope, and purpose of all the pre-employment transition services described in section 113(b) of the Rehabilitation Act and 34 CFR 361.48(a)(2). While it is possible that an eligible student with a disability could need such a service, it is not reasonable to believe that the need was tied solely to the student's participation in pre-employment transition services. Rather, it is most likely that the need is more general and associated with the eligible student with a disability's VR program as a whole, but not limited to the pre-employment transition services. As such, the service is not allocable to pre-employment transition services and DSUs must pay for the service with other VR program funds.
Sections 103(a)(12), (13), (16), (17), and (20) permit the DSU to provide various employment-related services to eligible individuals (see also 34 CFR 361.48(b)(13), (15), (16), (19), and (20)). These services are next in the continuum of services, once eligible students have identified their career interests through pre-employment transition services and further developed and pursued them through postsecondary education and vocational training offered through transition services that assist them in transitioning from school to specific employment outcomes. These employment-related services are well beyond the continuum of services available as pre-employment transition services and are directly tied to specific occupations. For this reason, these services are beyond the nature, scope, and purpose of pre-employment transition services described in section 113(b) and 34 CFR 361.48(a)(2). Thus, they are not allocable to those services. DSUs must use other VR program funds to pay the costs associated with providing these services.
Through this notice of interpretation, the Secretary clarifies that DSUs may use VR funds reserved under section 110(d)(1) of the Rehabilitation Act and 34 CFR 361.65(a)(3)(i) to pay for auxiliary aids and services needed by all students with disabilities (
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Copyright Royalty Board, Library of Congress.
Final rule.
The Copyright Royalty Judges publish a final rule governing the rates and terms for the digital performances of sound recordings by certain public radio stations and for the making of ephemeral recordings necessary to facilitate those transmissions for the period commencing January 1, 2021, and ending on December 31, 2025.
Effective January 1, 2021.
Anita Blaine, Program Specialist, by telephone at (202) 707-0078 or email at
On October 29, 2019, the Copyright Royalty Judges (Judges) published a proposed rule governing the rates and terms for the digital performances of sound recordings by certain public radio stations and for the making of ephemeral recordings necessary to facilitate those transmissions for the period commencing January 1, 2021, and ending on December 31, 2025. 84 FR 57833. The rates and terms in the proposed rule were the subject of a settlement among SoundExchange, Inc. (“SoundExchange”), National Public Radio, Inc. (“NPR”), and the Corporation for Public Broadcasting (“CPB”) (together, the “Settling Parties”) of their interests related to Web V
The Judges “may decline to adopt the agreement as a basis for statutory terms and rates for participants that are not parties to the agreement,” only “if any participant [in the proceeding] objects to the agreement and the [Judges] conclude, based on the record before them if one exists, that the agreement does not provide a reasonable basis for setting statutory terms or rates.” 17 U.S.C. 801(b)(7)(A)(ii). Because no Web V participant has objected to the settlement, and the Judges find no basis in the record to conclude that the settlement does not provide a reasonable basis for setting statutory terms and rates, the Judges adopt the terms and rates as proposed.
Copyright, Digital audio transmissions, Performance right, Sound recordings.
For the reasons set forth in the preamble, the Copyright Royalty Judges amend 37 CFR part 380 as follows:
17 U.S.C. 112(e), 114(f), 804(b)(3).
For purposes of this subpart, the following definitions apply:
(1) Is licensed as such by the Federal Communications Commission;
(2) Originates programming and is not solely a repeater station;
(3) Is a member or affiliate of NPR, American Public Media, Public Radio International, or Public Radio Exchange, a member of the National Federation of Community Broadcasters, or another public radio station that is qualified to receive funding from CPB pursuant to its criteria;
(4) Qualifies as a “noncommercial webcaster” under 17 U.S.C. 114(f)(4)(E)(i); and
(5) Either—
(i) Offers website Performances only as part of the mission that entitles it to be exempt from taxation under section 501 of the Internal Revenue Code of 1986 (26 U.S.C. 501); or
(ii) In the case of a governmental entity (including a Native American Tribal governmental entity), is operated exclusively for public purposes.
(a)
(1) 2021: 360,000,000;
(2) 2022: 370,000,000;
(3) 2023: 380,000,000;
(4) 2024: 390,000,000; and
(5) 2025: 400,000,000.
(b)
(1) An annual minimum fee for each Public Broadcaster for each year during the Term;
(2) Additional usage fees for certain Public Broadcasters; and
(3) A discount that reflects the administrative convenience to the Collective (for purposes of this subpart, the term “Collective” refers to SoundExchange, Inc.) of receiving annual lump sum payments that cover a large number of separate entities, as well as the protection from bad debt that arises from being paid in advance.
(c)
(d)
(e)
(f)
(1) Obligate such third Person to provide all such services in accordance with all applicable provisions of the statutory licenses and this subpart;
(2) Specify that such third Person shall have no right to make website Performances or any other performances or Ephemeral Recordings on its own behalf or on behalf of any Person or entity other than a Public Broadcaster through the Public Broadcaster's Authorized website by virtue of its services for the Public Broadcaster, including in the case of Ephemeral Recordings, pre-encoding or otherwise establishing a library of sound recordings that it offers to a Public Broadcaster or others for purposes of making performances, but instead must obtain all necessary licenses from the
(3) Specify that such third Person shall have no right to grant any sublicenses under the statutory licenses; and
(4) Provide that the Collective is an intended third-party beneficiary of all such obligations with the right to enforce a breach thereof against such third Person.
(a)
(b)
(c)
Approved by:
U.S. Agency for International Development.
Final rule.
The U.S. Agency for International Development (USAID) is issuing a final rule amending the Agency for International Development Acquisition Regulation (AIDAR) to streamline the procedures for issuing contracting officer and agreement officer warrants to U.S. Personal Services Contractors (US PSCs) and Cooperating Country National Personal Services Contractors (CCN PSCs).
This final rule is effective March 30, 2020.
Anne Sattgast, Telephone: 202-916-2623 or Email:
The U.S. Agency for International Development (USAID) is located in offices in over 80 countries with programs in over 100 nations. USAID operates in a fluid environment responding to a myriad of crises such as war, natural disasters, epidemics, as well as working towards its long term mission of reducing poverty, strengthening democratic governance, and helping people emerge from humanitarian crises and progress beyond assistance.
The Agency's warranted work force is critical to managing these efforts. A shortage of warranted contracting/agreement officers requires that the Agency be able to designate highly qualified US Personal Services Contractors (US PSCs) and Cooperating Country National Personal Services Contractors (CCN PSCs) as contracting/agreement officers in an expeditious manner. The delegation of limited contracting/agreement officer authorities to a select number of CCN PSCs will also bolster the Agency to succeed in terms of building long-term, host country technical capacity to materially assist the Missions with procurement responsibility.
Currently, a US PSC can be designated as a contracting officer only when a deviation from AIDAR 701.603-70 is approved; and when the Assistant Administrator for the Bureau for Management (AA/M) approves an exception in accordance with AIDAR Appendix D 4(b)(3)e.
Additionally, the Agency currently allows for the delegation of certain limited contracting officer authorities to highly qualified CCN PSCs. The CCN warrant program ran as a pilot from 2011-2014. The program became permanent in September 2014, when USAID issued a two-year class deviation from 48 CFR AIDAR 701.603-70. In conjunction with the approval of the class deviation, the Assistant Administrator for the Bureau for Management (AA/M) approved a class exception to the limitations in AIDAR Appendix J 4(b)(3). Subsequent two-year class deviations were issued for the permanent CCN warrant program in September 2016 and September 2018.
USAID published a proposed rule in the
This final rule amends the AIDAR to streamline the procedures for issuing contracting officer and agreement officer warrants to US PSCs and CCN PSCs. Thirteen respondents submitted comments related to the proposed rule.
USAID reviewed and considered the public comments before the issuance of this final rule. No changes were made to the proposed rule as a result of the comments. A discussion of the comments is provided below.
This final rule has been drafted in accordance with Executive Orders (E.O.s) 12866 and 13563, which direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential
USAID certifies that this rule will not have a significant economic impact on a substantial number of small entities. Consequently, the Agency has not prepared a regulatory flexibility analysis.
This is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act.
This rule does not contain information collection requirements, and a submission to OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Government procurement.
For the reasons stated in the preamble, USAID amends 48 CFR Chapter 7 as set forth below:
Sec. 621, Pub. L. 87-195, 75 Stat. 445, (22 U.S.C. 2381) as amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; and 3 CFR 1979 Comp., p. 435.
A contracting officer represents the U.S. Government through the exercise of his/her delegated authority to negotiate, sign, and administer contracts on behalf of the U.S. Government. The contracting officer's duties are sensitive, specialized, and responsible. To ensure proper accountability, and to preclude possible security, conflict of interest, or jurisdiction problems, USAID contracting officers must be U.S. citizen direct-hire employees of the U.S. Government. However, Director, Bureau for Management, Office of Acquisition and Assistance (M/OAA Director) may also designate a U.S. Personal Services Contractor (USPSC) or a Cooperating Country National Personal Services Contractor (CCNPSC) as a contracting officer with a specific level of warrant authority. To qualify for a designation as a contracting officer, an individual must meet the requirements in FAR subpart 1.6 and the Agency's applicable warrant program.
4.
(b) * * *
(3) * * *
b. They may not be delegated authority to sign obligating or subobligating documents except when specifically designated as a contracting officer or an agreement officer in accordance with FAR subpart 1.6 and the Agency's applicable warrant program.
(4)
(Authority: Sec. 621, Pub. L. 87-195, 75 Stat. 445, (22 U.S.C. 2381) as amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; and 3 CFR 1979 Comp., p. 435)
4. Policy
(b) * * *
(3) * * *
b. They may not be delegated authority to sign obligating or subobligating documents except when a cooperating country national personal services contractor is specifically designated as a contracting officer or an agreement officer in accordance with FAR subpart 1.6 and the Agency's applicable warrant program.
(4)
(Authority: Sec. 621, Pub. L. 87-195, 75 Stat. 445, (22 U.S.C. 2381) as amended; E.O. 12163, Sept. 29, 1979, 44 FR 56673; and 3 CFR 1979 Comp., p. 435)
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; closure.
NMFS implements an accountability measure (AM) through this temporary rule for commercial harvest of king mackerel in the southern zone of the Gulf of Mexico (Gulf) exclusive economic zone (EEZ) using run-around gillnet gear. NMFS has determined that the commercial annual catch limit (ACL) (equivalent to the commercial quota) for king mackerel using run-around gillnet gear in the southern zone of the Gulf EEZ has been reached. Therefore, NMFS closes the southern zone to commercial king mackerel fishing using run-around gillnet gear in the Gulf EEZ on February 25, 2020. This closure is necessary to protect the Gulf king mackerel resource.
The closure is effective from 12 p.m. local time on February 25, 2020, until 6 a.m. local time on January 19, 2021.
Kelli O'Donnell, NMFS Southeast Regional Office, telephone: 727-824-5305, email:
The fishery for coastal migratory pelagic fish in the Gulf includes king mackerel, Spanish mackerel, and cobia, and is managed under the Fishery Management Plan for the Coastal Migratory Pelagic Resources of the Gulf of Mexico and Atlantic Region (FMP). The FMP was prepared by the Gulf of Mexico and South Atlantic Fishery Management Councils and is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622. All weights for Gulf migratory group king mackerel (Gulf king mackerel) apply as either round or gutted weight.
The commercial fishery for Gulf king mackerel is divided into western, northern, and southern zones. The southern zone for Gulf king mackerel encompasses an area of the Gulf EEZ off Collier and Monroe Counties in south Florida, which is the EEZ south of a line extending due west from the boundary of Lee and Collier Counties on the Florida west coast, and south of a line extending due east from the boundary of Monroe and Miami-Dade Counties on the Florida east coast (50 CFR 622.369(a)(1)(iii)).
The commercial ACL for Gulf king mackerel is divided into separate ACLs for hook-and-line and run-around gillnet gear. The use of run-around gillnets for king mackerel is restricted to the Gulf southern zone. On November 13, 2019, as a result of an overage of the 2018-2019 commercial gillnet ACL, NMFS reduced the 2019-2020 commercial quota (equivalent to the commercial ACL) for Gulf king mackerel in the southern zone for vessels using run-around gillnet gear to 530,043 lb (240,423 kg) for the 2019-2020 fishing year, which extends through June 30, 2020 (84 FR 61568, November 13, 2019; 50 CFR 622.388(a)(1)(iii)).
Regulations at 50 CFR 622.8(b) and 622.388(a)(1) require NMFS to close any component of the king mackerel commercial sector when its applicable quota has been reached, or is projected to be reached, by filing a notification to that effect with the Office of the Federal Register. NMFS has determined that for the 2019-2020 fishing year, the adjusted Gulf king mackerel commercial quota for vessels using run-around gillnet gear in the southern zone has been reached. Accordingly, commercial fishing using such gear in the southern zone is closed at 12 p.m. local time on February 25, 2020, until 6 a.m. local time on January 19, 2021, the beginning of the next fishing season,
Persons aboard a vessel using hook-and-line gear in the southern zone for which a Federal commercial permit for Gulf king mackerel has been issued, except persons aboard such a vessel also issued a Federal commercial permit to harvest Gulf king mackerel using run-around gillnet gear, may fish for or retain Gulf king mackerel unless the southern zone commercial quota for hook-and-line gear has been met and the hook-and-line component of the commercial sector has been closed. In addition, as long as the recreational sector for Gulf king mackerel is open (50 CFR 622.384(e)(1)), a person aboard a vessel that has a valid Federal commercial gillnet permit for king mackerel may continue to retain king mackerel under the recreational bag and possession limits set forth in 50 CFR 622.382(a)(1)(ii) and (a)(2).
During the commercial closure, Gulf king mackerel harvested using run-around gillnet gear in the southern zone may not be purchased or sold. This prohibition does not apply to Gulf king mackerel harvested using run-around gillnet gear in the southern zone that were harvested, landed ashore, and sold prior to the closure and were held in cold storage by a dealer or processor (50 CFR 622.384(e)(2)).
The Regional Administrator for the NMFS Southeast Region has determined this temporary rule is necessary for the conservation and management of Gulf king mackerel and is consistent with the FMP, the Magnuson-Stevens Act, and other applicable laws.
This action is taken under 50 CFR 622.8(b) and 622.388(a)(1) and is exempt from review under Executive Order 12866.
These measures are exempt from the procedures of the Regulatory Flexibility Act because the temporary rule is issued without prior notice and opportunity for public comment.
This action responds to the best scientific information available. The NOAA Assistant Administrator for Fisheries (AA) finds that the need to immediately implement this action to close the run-around gillnet component of the commercial sector in the Gulf southern zone constitutes good cause to waive the requirements to provide prior notice and opportunity for public comment pursuant to the authority set forth in 5 U.S.C. 553(b)(B), because prior notice and opportunity for public comment on this temporary rule is unnecessary and contrary to the public interest. Such procedures are unnecessary because the rule implementing the commercial quota and the associated AM has already been subject to notice and comment, and all that remains is to notify the public of the closure. Prior notice and opportunity for public comment is contrary to the public interest, because any delay in the closure of the commercial harvest could result in the commercial quota being exceeded. There is a need to immediately implement this action to protect the king mackerel resource, because the capacity of the fishing fleet allows for rapid harvest of the quota. Prior notice and opportunity for public comment on this action would require time and would potentially result in a harvest well in excess of the established quota.
For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in effectiveness under 5 U.S.C. 553(d)(3).
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Temporary rule; interim measures; request for comments.
This temporary rule implements interim recreational management measures for the 2020 Atlantic Bluefish Fishery to prevent overfishing. This action is necessary to constrain recreational harvest at the start of the fishing year while final 2020 measures are developed and implemented. These measures are expected to help ensure the long-term recovery and sustainability of the bluefish stock.
Effective February 28, 2020, through August 26, 2020. Comments must be received on or before March 30, 2020.
You may submit comments on this document, identified by NOAA-NMFS-2020-0011, by either of the following methods:
1. Go to
2. Click the “Comment Now!” icon, complete the required fields, and
3. Enter or attach your comments.
Cynthia Ferrio, Fishery Management Specialist, (978) 281-9180.
The Mid-Atlantic Fishery Management Council and the Atlantic States Marine Fisheries Commission jointly manage the bluefish fishery under the Atlantic Bluefish Fishery Management Plan (FMP). The August 2019 bluefish operational assessment incorporated revised Marine Recreational Information Program (MRIP) estimates and determined that the bluefish stock is overfished with overfishing not occurring. NMFS notified the Council of the stock status change on November 12, 2019, and the Council is developing a rebuilding plan. The final assessment results were not available until fall 2019 and additional analysis was required to respond to the new MRIP data and develop revised catch limits. As a result, it was not possible to implement new specifications and recreational management measures for the January 1, 2020, start of the fishing year. To ensure some measures were in place for the 2020 fishery, NMFS published status quo interim specifications for 2020 (84 FR 54041, October 9, 2019) with the expectation that they would be replaced once final measures informed by the assessment could be developed. However, in light of the assessment results and stock status change, the interim measures for 2020 are no longer appropriate and are substantially more liberal that what is necessary to sustainably manage the bluefish fishery and prevent overfishing for this overfished stock.
In September 2019, the Council's Scientific and Statistical Committee (SSC) recommended a substantially reduced 2020 and 2021 acceptable biological catch for bluefish. The Council and the Commission's Bluefish Board jointly approved catch specifications for fishing years 2020 and 2021 at a joint meeting in October 2019. The Council and Board delayed decision-making on the 2020 recreational management measures until the joint December 2019 meeting. This delay was necessary to address the later than normal specifications development timing, and to analyze options designed to reduce recreational catch. Recreational measures have not been adjusted in nearly a decade, so appropriate time was given to exploring alternatives, particularly in light of the magnitude of change necessary for 2020.
Based on projected recreational landings for the 2020 bluefish fishery (13.27 million lb; 6,020 mt), the Council's Monitoring Committee determined that a 28.65-percent reduction in recreational harvest is necessary to constrain catch to the Council-recommended revised 2020 recreational harvest limit (RHL) of 9.48 million lb (4,301 mt). The Council and Board took final action in December 2019, and recommended a mode-specific reduction in bag limit from 15 to 3 fish for private anglers and to 5 fish for for-hire vessels, with no changes to recreational seasons or size limits.
The 2020 bluefish fishing year began on January 1. Because of the previously mentioned timing issues associated with developing the revised 2020 bluefish specifications and recreational management measures, it was not possible for the Council to provide analysis supporting its recommendation for recreational measures in time for the start of the fishing year. The Council is finalizing this document, which it will submit to NMFS to complete formal notice-and-comment rulemaking to finalize 2020 specifications and recreational measures by late spring.
The action taken by the Board in December 2019 was final, and states are expected to put in place recreational management measures as expeditiously as possible. However, many states require a public hearing and/or legislative process to finalize measures. As a result, many states have indicated that they will not be able to implement their own measures quickly. Some have stated that their process will be accelerated if Federal measures are in place first. The recreational bluefish fishery is very active in a few southern states early in the year. Recent data shows that these states harvest a substantial portion of their annual bluefish catch between January and April, comprising up to 29 percent of the coast-wide recreational bluefish catch for the year. If immediate action is not taken with interim measures, the status quo Federal measures of a 15-fish bag limit will remain in place until final 2020 measures can be implemented. Harvest will be relatively unconstrained, which will greatly increase the risk of overfishing on the already overfished stock, potentially harming its long-term health and recovery.
This action implements a reduction in the Federal bluefish recreational bag limit from 15 to 3 fish for private anglers and to 5 fish for for-hire vessels. All other management measures, including recreational season and minimum fish size, remain unchanged. This action is consistent with what the Council and Board approved at the joint meeting in December 2019 to constrain harvest to the reduced 2020 RHL and prevent overfishing. This bag limit reduction is expected to effectively constrain bluefish catch to prevent overfishing of the stock. Interim action is necessary to ensure these measures are in place as soon as possible in the fishing year while the proposed and final rulemaking of the Council-recommended measures is completed. This temporary rule has an effective period limited by the Magnuson-Stevens Act to 180 days, with a potential extension of an additional 186 days. The Council-recommended action containing revised 2020 specifications, and the same recreational measures implemented by this rule, is already in development and expected to be implemented in late spring. However, if the expected permanent rulemaking is not in place before the expiration of this rule (180 days following publication), an extension of the interim measures for 186 days will be considered.
Section 305(c) of the Magnuson-Stevens Act (16 U.S.C. 1855(c)) authorizes the Secretary of Commerce to implement interim measures to address overfishing. This action meets the 305(c) requirements for interim measures because it is necessary to prevent overfishing on the bluefish stock which was recently declared overfished. As a fishery with a significant recreational component, the bluefish fishery was substantially affected by the revised MRIP data and the 2019 operational assessment results. This assessment found the stock to be overfished, and while it was not subject to overfishing in 2018 (the terminal year of the assessment), the new data suggests that this was the first year overfishing had not been occurring in several years. Without changes to the current management measures, expected recreational catch (17.3 million pounds; 7,849 metric tons) would exceed the Council-recommended acceptable biological catch recommendation for the entire fishery (16.28 million pounds; 7,385 metric tons), with no allowance for catch from the commercial sector.
While some changes resulting from the revised MRIP data were expected, the magnitude of the shift in stock status necessitating changes to the catch limits and recreational management measures was not. Because of unforeseen large management adjustments necessary to address this change, the Council and Board chose to separate development of catch specifications and recreational management measures. This delayed Council decision on recreational management measures until December 2019. Due to necessary analyses and process requirements for the Council to formally submit its recommendation to NMFS, the Council action will not be implemented until at least April 2020, while the fishing year began on January 1. Delayed implementation of these measures increases the risk of overfishing for the year. Higher harvest will occur under the substantially less restrictive status quo measures
These interim measures are intended to prevent overfishing in the Atlantic bluefish fishery and avoid serious damage to the already overfished fishery resource. Accelerating the implementation of the Council and Board-recommended measures through this expedited rulemaking is also expected to allow several states to rely on Federal measures, and accelerate the implementation of state management measures. Some states will be able to forego public meetings or the legislative process as their state provisions for bluefish management allow for instantaneous adoption of Federal management measures as soon as they become available. Therefore, avoiding the serious conservation and management problem of subjecting the overfished bluefish stock to potential overfishing conditions due to reasonably unforeseen circumstances justifies these interim measures, and outweighs the benefit of advance notice and comment.
The Magnuson-Stevens Act limits NMFS' authority to implement interim measures for an initial period of 180 days, with a potential extension up to an additional 186 days, if warranted. The public has an opportunity to comment on the initial recreational management measures in this temporary rule (see
The NMFS Assistant Administrator has determined that this temporary rule is consistent with the criteria and justifications for use of interim measures in section 305(c) of the Magnuson-Stevens Act. NMFS has also determined that this rule is consistent with the Atlantic Bluefish FMP, other provisions of the Magnuson-Stevens Act, and other applicable law.
The Assistant Administrator for Fisheries, NOAA, finds good cause under 5 U.S.C. 553(b)(B) to waive prior notice and the opportunity for public comment because it would be contrary to the public interest. Additionally, the need to implement these measures in a timely manner to reduce the risk of overfishing the depleted bluefish resource constitutes good cause under the authority contained in 5 U.S.C. 553(d)(3) to waive the 30-day delay of effectiveness period for this rule.
The bluefish fishing year began on January 1, 2020, and is operating under an unrestrictive recreational bag limit of 15 fish. Although the Council already took final action to implement measures intended to constrain recreational catch to a reduced RHL, it was not able to do so until December 2019 given delayed data available and time necessary to develop and analyze potential measures. These interim measures are necessary to implement a restrictive recreational bag limit as quickly as possible to prevent overfishing on the overfished bluefish stock. Recent data shows that the recreational bluefish fishery harvests up to 29 percent of the coast-wide recreational bluefish catch for the year between January and April. If immediate action is not taken with interim measures, the status quo Federal measures of a 15-fish bag limit will remain in place until final 2020 measures can be implemented. Further delaying implementation of these measures would increase the risk of overfishing and be potentially harmful to the long-term sustainability of the resource. Public comments will be accepted on this temporary rule (see
These interim measures are being issued at the earliest possible date to minimize the amount of time the 2020 recreational bluefish fishery is at risk of overfishing, and will only be effective until permanent measures can be implemented. Unlike actions that require an adjustment period to comply with new rules, charter/party operators will not have to purchase new equipment or otherwise expend time or money to comply with these management measures. Rather, complying with this rule simply means adhering to a reduced bag limit. These measures were discussed at multiple public Council and Commission meetings throughout 2019 and are generally expected by the recreational fishing sector.
For all of the reasons outlined above, NMFS finds it impracticable and contrary to the public interest to provide prior opportunity to comment on these interim measures. Prior notice and opportunity for public comment, as well as a 30-day delayed effectiveness would prevent the positive benefit to the resource that this rule is intended to provide, and undermines the purpose of this interim action.
This action is being taken pursuant to the 305(c) emergency action and interim measures provision of the Magnuson-Stevens Act and is exempt from Office of Management and Budget review.
This temporary rule is exempt from the procedures of the Regulatory Flexibility Act because it is issued without opportunity for prior notice and opportunity for public comment.
This rule does not duplicate, conflict, or overlap with any existing Federal rules.
This action would not establish any new reporting or record-keeping requirements.
Fisheries, Fishing, Reporting and recordkeeping requirements.
For the reasons set out in the preamble, 50 CFR part 648 is amended as follows:
16 U.S.C. 1801
The additions read as follows:
(c)
(1)
(2)
(d)
Executive Office for Immigration Review, Department of Justice.
Notice of proposed rulemaking.
The Department of Justice's Executive Office for Immigration Review (“EOIR”) imposes fees, also known as user charges, for the filing of certain EOIR forms for applications for relief, appeals filed with the Board of Immigration Appeals (“BIA”), and motions to reopen or reconsider. When applicable, the current fee for EOIR applications for relief is $100, and the fee for motions or appeals is $110. EOIR last reviewed and updated these fees 33 years ago, in 1986. This proposed rule (“proposed rule” or “rule”) would increase the fees for those EOIR applications, appeals, and motions that are subject to an EOIR-determined fee, based on a fee review conducted by EOIR. This proposed rule would not affect the fees that have been established by the Department of Homeland Security (“DHS”) with respect to DHS forms for applications that are filed or submitted in EOIR proceedings. This proposal does not affect the ability of aliens to submit fee waiver requests, nor does it add new fees. The proposed rule also updates cross-references to DHS regulations regarding fees and makes a technical change regarding requests under the Freedom of Information Act.
Written comments must be postmarked and electronic comments must be submitted on or before March 30, 2020.
You may submit comments, identified by EOIR Docket No. 18-0101, by one of the following methods:
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Lauren Alder Reid, Assistant Director, Office of Policy, Executive Office for Immigration Review, 5107 Leesburg Pike, Suite 2600, Falls Church, VA 22041, telephone (703) 305-0289 (not a toll-free call).
Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on all aspects of this rule. The Department of Justice (“Department” or “DOJ”) also invites comments that relate to the economic, environmental, or federalism effects that might result from this rule. Comments that will provide the most assistance to the Department in developing these procedures will reference a specific portion of the rule, explain the reason for any recommended change, and include data, information, or authority that support such recommended change.
All submissions received should include the agency name and EOIR Docket No. 18-0101 for this rulemaking. Please note that all comments received are considered part of the public record and made available for public inspection at
If you want to submit personal identifying information (such as your name, address, etc.) as part of your comment, but do not want it to be posted online, you must include the phrase “PERSONAL IDENTIFYING INFORMATION” in the first paragraph of your comment and identify what information you want redacted.
If you want to submit confidential business information as part of your comment, but do not want it to be posted online, you must include the phrase “CONFIDENTIAL BUSINESS INFORMATION” in the first paragraph of your comment. You also must prominently identify confidential business information to be redacted within the comment. If a comment has so much confidential business information that it cannot be effectively redacted, all or part of that comment may not be posted on
Personal identifying information and confidential business information identified as set forth above will be placed in the agency's public docket file, but not posted online. To inspect the agency's public docket file in person, you must make an appointment with agency counsel. Please see the
In 1988, Congress established the Immigration Examinations Fee Account in the Treasury of the United States.
EOIR's authority to charge user fees first derived from title V of the IOAA.
Circular No. A-25 Revised
As noted above, the IOAA authorizes a Federal agency to charge user fees. 31 U.S.C. 9701. Section 286 of the INA, 8 U.S.C. 1356, contemplates the collection of certain fees and fines by the Attorney General and the Secretary of Homeland Security.
EOIR currently imposes a fee for eight distinct types of filings: Three applications for relief in proceedings before an immigration judge (all of whom serve within the Office of the Chief Immigration Judge (“OCIJ”)); three types of appeals to the BIA; and two motions that may be filed in proceedings before either an immigration judge or the BIA. 8 CFR 1103.7(b).
These filings represent important forms of relief and procedural tools for the parties in immigration proceedings before the OCIJ and the BIA.
• Aliens use the Forms EOIR-42A and EOIR-42B to apply for cancellation of removal, which is a statutorily provided relief from removal if they have relatively lengthy periods of residence in the United States, depending on the alien's status and whether the alien's removal would cause the alien's citizen or resident family members particularly severe hardships, in addition to other eligibility requirements.
• Aliens use the Forms EOIR-26, EOIR-29, and EOIR-45 for appeals to the BIA. Such forms, and other procedural mechanisms like motions to reconsider,
• Finally, motions to reopen are an “important safeguard” used “to ensure a proper and lawful disposition” of immigration proceedings.
For individuals seeking relevant relief before the immigration courts, the fees are as follows:
For individuals who wish to file an appeal or relevant motion with the BIA, the fees are as follows:
EOIR does not require a fee in every circumstance when a party files one of the above-listed applications for relief, appeals to the BIA, or motions. There are certain circumstances when the normal filing fee explicitly does not apply.
These EOIR fees relate back to a final rule that the former Immigration and Naturalization Service (“INS”) and EOIR issued in 1986. 51 FR 39993 (Nov. 4, 1986) (codified at 8 CFR 103.7).
In the 1986 rule, EOIR increased the fee for filing motions to reopen and motions to reconsider from $50 to the current $110; the fee for filing an appeal from any non-bond decision under the immigration laws in any type of proceedings over which the BIA had appellate jurisdiction, then a Form I-290A, from $50 to the current $110; and the fee for an application for suspension of deportation under section 244 of the INA, then a Form I-256A, from $75 to $100.
Since 1986, the former INS, and subsequently DHS, have promulgated multiple regulatory changes related to the fees for applications that are controlled by DHS, as currently codified in 8 CFR 103.7 and proposed to be revised in 8 CFR 103.7 and a newly added 8 CFR part 106.
EOIR determined that it was necessary to conduct an updated assessment of the costs for processing the forms and motions for which EOIR sets the applicable fees.
In the spring of 2018, EOIR conducted a comprehensive study using activity-based costing to determine the cost to EOIR for each type of application, appeal, and motion for which EOIR levies a fee under 8 CFR 1103.7(b).
OMB Circular A-25 Revised encourages Federal agencies to recover the full cost of providing specific services to users, as well as associated costs. OMB Circular A-25 Revised at secs. 5-6. Full costs include, but are not limited to, an appropriate share of the following:
• Direct and indirect personnel costs, including salaries and fringe benefits, such as medical insurance and retirement;
• Physical overhead, consulting, and other indirect costs, including material and supply costs, utilities, insurance, travel, and rents or imputed rents on land, buildings, and equipment;
• Management and supervisory costs; and
• Costs of enforcement, collection, research, establishment of standards, and regulation.
Congress has provided that DOJ may set EOIR fees for providing adjudication and naturalization services at a level that will ensure recovery of the full costs of providing all such services.
In this fee study, however, for a variety of reasons, EOIR included only direct salary costs and did not include the overhead costs, cost of non-salary benefits, or costs that stem from processing corresponding applications or documents that may be filed in conjunction with those items for which EOIR charges a fee. With regard to overhead costs, many of these costs occur without respect to the number of applications, appeals, or motions (for which EOIR levies a fee) processed by the agency and are therefore very difficult to quantify in a calculation of cost for individual filings. With respect to non-salary benefits, EOIR excluded such benefits because not every employee is eligible for, or takes advantage of, these benefits; the non-salary costs to the Government and to the employee also vary drastically depending on which combination of benefits an employee selects. As such, to avoid potential inaccuracies in the calculation of overhead and non-salary benefits, EOIR has decided to include only the currently known, quantified costs in determining what is a sufficient fee level under section 286(m) of the INA. EOIR's decision not to include overhead and non-salary benefits in the calculation of actual costs also accounts for the public interest in having non-parties bear some of the cost burden for filing documents associated with proper application of the law as it pertains to the statutory right to appeal or apply for certain forms of relief. Further, EOIR did not include in the cost evaluation the many applications and associated documents commonly appended to, or associated with, the forms (
The study demonstrated that the applications, appeals, and motions under 8 CFR 1103.7(b) currently have the following processing costs for EOIR:
The activity-based cost analysis demonstrates that EOIR's processing costs consistently exceed the assessed fees for these EOIR applications for relief, appeals, and motions. Although EOIR is an appropriated agency, EOIR has determined that it is necessary to update the fees charged for these EOIR forms and motions to more accurately reflect the costs for EOIR's adjudications of these matters. At the same time, however, EOIR recognizes that these applications for relief, appeals, and motions represent statutorily provided relief and important procedural tools that serve the public interest and provide value to those who are parties to the proceedings by ensuring accurate administrative proceedings.
Accordingly, EOIR proposes the following fee changes:
1. Increase the fee for Form EOIR-26 from $110 to $975.
2. Increase the fee for Form EOIR-29 from $110 to $705.
3. Increase the fee for Form EOIR-40 from $100 to $305.
4. Increase the fee for Form EOIR-42A from $100 to $305.
5. Increase the fee for Form EOIR-42B from $100 to $360.
6. Increase the fee for Form EOIR-45 from $110 to $675.
7. Increase the fee for filing a motion to reopen or reconsider from 110 before both the OCIJ and the BIA to 145 if either motion is filed before the OCIJ, and 895 if either motion is filed before the BIA.
The table below includes, for each form, the current fee, the proposed fee, and the fee collection difference between the current and proposed fees based on FY 2018 form receipts. We also include a column that notes what today's fee is in 1986 dollars. It is more meaningful to compare inflation-adjusted figures because the fees have not been adjusted for inflation since they were initially set in 1986.
These proposed fee changes are reflected in the following charts:
These proposed changes would assign a different fee for a motion to reopen or a motion to reconsider that is filed with the immigration court in the OCIJ than for a motion to reopen or a motion to reconsider that is filed with the BIA. Due to differences in the processing steps for these motions between the OCIJ and the BIA, and different staff costs across the components, these fee differences more accurately reflect the substantially higher processing costs of a motion to reopen or a motion to reconsider before the BIA while not assigning an unduly high fee as a matter of public policy on parties who wish to file a motion to reopen or a motion to reconsider with the immigration courts.
Consistent with current practice, the OCIJ and the BIA would continue to entertain requests for fee waivers and have the discretionary authority to waive a fee for an application or motion upon a showing that the filing party is unable to pay.
The proposed rule also proposes technical edits. First, it proposes updates to EOIR's cross-references throughout 8 CFR chapter V to conform with DHS's proposed revisions to 8 CFR 103.7 and proposed addition of 8 CFR part 106, both regarding fees.
Second, the proposed rule provides that, although DHS is proposing a 50 fee for asylum applications, which are submitted on DHS Form I-589, no fee would apply where an applicant submits a Form I-589 for the sole purpose of seeking withholding of removal under section 241(b)(3) of the INA (8 U.S.C. 1231(b)(3)) or protection from removal under the regulations implementing U.S. obligations under Article 3 of the Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (CAT)—or both—in a removal proceeding.
Third, the proposed rule would change 8 CFR 1103.7(d) to reflect the proper regulation regarding requests under the Freedom of Information Act. The section, as currently drafted, incorrectly refers to 28 CFR 16.11.
Finally, the proposed rule would make technical corrections to fee-related citations to EOIR's own regulations.
The Department has reviewed this proposed regulation in accordance with the Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, tit. II, 110 Stat. 847, and has determined that this rule would not have a significant economic impact on a substantial number of small entities. The rule would not regulate “small entities” as that term is defined in 5 U.S.C. 601(6). Only individuals, rather than entities, are responsible for paying the fees affected by this proposed rule, though they may pay the fee through a representative.
This rule will not result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.
This rule is not a major rule as defined by the Congressional Review Act. 5 U.S.C. 804(2). This rule would not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices for consumers, individual industries, government agencies, or geographic regions; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.
Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health, and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of using the best available methods to quantify costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 13771 directs agencies to reduce regulation and control regulatory costs and, for all qualifying regulations, to identify at least two existing regulations for elimination.
This rule has been drafted in accordance with the principles of Executive Order 12866, section 1(b), and Executive Order 13563. The Department considers the proposed rule to be a “significant regulatory action” under section 3(f)(3) of Executive Order 12866 because it materially alters user fees, but it is not an economically significant action because the annual effect on the economy is less than $100 million annually. Accordingly, the proposed regulation has been submitted to OMB for review. This proposed rule would impose transfer payments between the public and the Government and is not expected to impose any new cost burdens that will need to be offset under Executive Order 13771. Thus, this proposed rule is not expected to be subject to the requirements of Executive Order 13771.
In the spring of 2018, EOIR conducted a comprehensive study using activity-based costing to determine the cost to EOIR for each type of application, appeal, and motion for which EOIR levies a fee under 8 CFR 1103.7(b). EOIR's methodology for conducting this comprehensive study was as follows:
First, in the survey-data phase, EOIR gathered survey data and consulted with OCIJ and BIA experts to determine the appropriate staff positions involved and the average time required to process and adjudicate each fee-based form or motion. EOIR also researched data from OPM and the GSA to determine the average salary rates for the applicable staff positions, including both Federal employees and EOIR contractors.
Second, in the process-mapping phase, EOIR developed step-by-step process maps, with assigned times and staff positions, for each fee-based form or motion processed in the OCIJ and the BIA. OCIJ and BIA experts validated any assumptions made during the process-mapping phase.
Third, in the activity-based-costing phase, EOIR allocated the salary costs from the GSA and OPM data to each step in the process, based on the amount of time the step takes, the average salary of the responsible staff, and the percentage of total cases in which the step occurs. As discussed above, EOIR did not include other costs, such as the overhead costs for EOIR space that is used for processing applications, fringe benefits received by EOIR staff and contractors, interpreter costs, Federal Records Center costs, non-EOIR government agency costs, or the costs and time to process any non-fee-based application that is submitted in conjunction with a motion to reopen or reconsider.
EOIR used this methodology to calculate an estimated cost for processing each form or motion for which EOIR levies a fee. The results of the activity-based-costing analysis are as follows:
As discussed above, these estimated costs calculated from the study
To determine the economic impact of the proposed rule, EOIR then compared current fee collection levels and the fee collections that would have been generated by the proposed fees, as applied to filings from FY 2018.
Though the proposed fees may seem high as compared to the current fees, the agency has not increased its fees since 1986. Taken over the 33-year timespan from 1986 to 2019, the proposed fee increases would represent compound annual growth rates ranging from 0.82 percent to 6.84 percent. As demonstrated in the chart above, these increases are marginal in terms of inflation-adjusted dollars. While EOIR recognizes that the new fees will be more burdensome, fee waivers are still possible for those who seek them.
This rule will not have substantial direct effects on the States, on the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with section 6 of Executive Order 13132, it is determined that this rule would not have sufficient federalism implications to warrant the preparation of a federalism summary impact statement.
This rule meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.
This rule does not propose new “collection[s] of information” as that term is defined under the Paperwork Reduction Act of 1995, Public Law 104-13, 109 Stat. 163 (codified at 44 U.S.C. 3501-3521) (PRA), and its implementing regulations, 5 CFR part 1320. There are no substantive changes to the forms as a result of this rulemaking; the only changes being proposed are revisions to the fee amounts for the existing forms for which EOIR sets the fees. The Department will be coordinating separately regarding updates to the existing forms under the PRA.
Administrative practice and procedure, Aliens, Immigration, Legal Services, Organization and functions (Government agencies).
Administrative practice and procedure, Aliens, Immigration.
Administrative practice and procedure, Aliens, Immigration, Reporting and recordkeeping requirements.
Administrative practice and procedure, Aliens.
Administrative practice and procedure, Aliens, Immigration, Reporting and recordkeeping requirements.
Administrative practice and procedure, Aliens.
Administrative practice and procedure, Immigration.
Aliens, Immigration, Reporting and recordkeeping requirements.
Accordingly, for the reasons set forth in the preamble, the Attorney General is proposing to amend title 8, chapter V of the Code of Federal Regulations as follows:
5 U.S.C. 301; 6 U.S.C. 521; 8 U.S.C. 1101, 1103, 1154, 1155, 1158, 1182, 1226, 1229, 1229a, 1229b, 1229c, 1231, 1254a, 1255, 1324d, 1330, 1361, 1362; 28 U.S.C. 509, 510, 1746; sec. 2 Reorg. Plan No. 2 of 1950; 3 CFR, 1949-1953 Comp., p. 1002; section 203 of Pub. L. 105-100, 111 Stat. 2196-200; sections 1506 and 1510 of Pub. L. 106-386, 114 Stat. 1527-29, 1531-32; section 1505 of Pub. L. 106-554, 114 Stat. 2763A-326 to -328.
8 U.S.C. 1101, 1103, 1304, 1356; 31 U.S.C. 9701; 28 U.S.C. 509, 510.
(b)
Form EOIR-26. For filing an appeal from a decision of an immigration judge—$975.
Form EOIR-29. For filing an appeal from a decision of an officer of the Department of Homeland Security—$705.
Form EOIR-45. For filing an appeal from a decision of an adjudicating official in a practitioner disciplinary case—$675.
(2)
Motion to reopen or motion to reconsider before the immigration court—$145.
Motion to reopen or motion to reconsider before the Board of Immigration Appeals—$895.
(4)
Form EOIR-40. Application for Suspension of Deportation—$305.
Form EOIR-42A. Application for Cancellation of Removal for Certain Permanent Residents—$305.
Form EOIR-42B. Application for Cancellation of Removal and Adjustment of Status for Certain Nonpermanent Residents—$360.
(ii)
(d)
8 U.S.C. 1101, 1103, 1158, 1226, 1252, 1282; Title VII of Public Law 110-229.
8 U.S.C. 1101, 1103, 1154, 1184, 1186a, 1186b, and 8 CFR part 2.
8 U.S.C. 1101 and note, 1103, 1183, 1185 (pursuant to E.O. 13323, 69 FR 241, 3 CFR, 2003 Comp., p. 278), 1201, 1224, 1225, 1226, 1228, 1365a note, 1379, 1731-32; Title VII of Public Law 110-229; 8 U.S.C. 1185 note (section 7209 of Pub. L. 108-458).
8 U.S.C. 1103, 1158, 1182, 1186a, 1186b, 1225, 1226, 1227, 1228, 1229a, 1229b, 1229c, 1252 note, 1361, 1362; secs. 202 and 203, Pub. L. 105-100 (111 Stat. 2160, 2193); sec. 902, Pub. L. 105-277 (112 Stat. 2681).
8 U.S.C. 1103, 1254, 1254a note, 8 CFR part 2.
8 U.S.C. 1101, 1103, 1182, 1255; section 202, Public Law 105-100, 111 Stat. 2160, 2193; section 902, Public Law 105-277, 112 Stat. 2681; Title VII of Public Law 110-229.
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to supersede Airworthiness Directive (AD) 2000-17-09, AD 2008-04-19 R1, and AD 2015-26-09; and to terminate all requirements of AD 2018-18-05, which applies to ATR—GIE Avions de Transport Régional Model ATR42-200, -300, and -320 airplanes. AD 2018-18-05 requires updating the maintenance or inspection program, as applicable, to incorporate new or more restrictive maintenance requirements and airworthiness limitations and terminates the relevant requirements of AD 2000-17-09, AD 2008-04-19 R1, and AD 2015-26-09. Since AD 2018-18-05 was issued, the FAA has determined that new or more restrictive airworthiness limitations are necessary. This proposed AD would require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations, as specified in a European Union Aviation Safety Agency (EASA) AD, which will be incorporated by reference. The FAA is proposing this AD to address the unsafe condition on these products.
The FAA must receive comments on this proposed AD by April 13, 2020.
You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:
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For the material identified in this proposed AD that will be incorporated by reference (IBR), contact the EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 89990 1000; email
You may examine the AD docket on the internet at
Shahram Daneshmandi, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3220; email
The FAA invites you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the
The FAA will post all comments received, without change, to
The FAA issued AD 2018-18-05, Amendment 39-19384 (83 FR 44463, August 31, 2018) (“AD 2018-18-05”), which applies to ATR—GIE Avions de Transport Régional Model ATR42-200, -300, and -320 airplanes.
AD 2018-18-05 requires updating the maintenance or inspection program, as applicable, to incorporate new or more restrictive maintenance requirements and airworthiness limitations. The FAA issued AD 2018-18-05 to address reduced structural integrity of the airplane.
AD 2018-18-05 specifies that accomplishing the revision required by paragraph (g) of that AD terminates all requirements of AD 2000-17-09, Amendment 39-11883 (65 FR 53897, September 6, 2000); AD 2008-04-19 R1, Amendment 39-16069 (74 FR 56713, November 3, 2009) (“AD 2008-04-19 R1”); and AD 2015-26-09, Amendment 39-18357 (81 FR 1483, January 13, 2016) (“AD 2015-26-09”); for ATR—GIE Avions de Transport Régional Model ATR42-200, -300, and -320 airplanes only.
AD 2008-04-19 R1 also applies to ATR—GIE Avions de Transport Régional Model ATR42-500 airplanes and Model ATR72 airplanes. The actions required by AD 2018-20-14, Amendment 39-19448 (83 FR 52123, October 16, 2018) (“AD 2018-20-14”) terminate all requirements of AD 2008-14-19 R1 for Model ATR42-500 airplanes. The actions required by AD 2019-13-04, Amendment 39-19677 (84 FR 35028, July 22, 2019) terminate all requirements of AD 2008-04-19 R1 for Model ATR72 airplanes.
AD 2015-26-09 also applies to ATR—GIE Avions de Transport Régional Model ATR42-500 airplanes. The actions required by AD 2018-20-14 terminate all requirements of AD 2015-26-09 for Model ATR42-500 airplanes.
This AD therefore proposes to supersede AD 2000-17-09, AD 2008-04-19 R1, and AD 2015-26-09; and to terminate all requirements of AD 2018-18-05.
Since AD 2018-18-05 was issued, the FAA has determined that new or more restrictive airworthiness limitations are necessary.
The EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2019-0256, dated October 17, 2019 (“EASA AD 2019-0256”) (also referred to as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all ATR—GIE Avions de Transport Régional Model ATR42-200, -300, and -320 airplanes. EASA AD 2019-0256 supersedes EASA AD 2017-0221R1 (which corresponds to FAA AD 2018-18-05).
This proposed AD was prompted by a determination that new or more restrictive airworthiness limitations are necessary. The FAA is proposing this AD to address reduced structural integrity of the airplane. See the MCAI for additional background information.
This NPRM does not propose to supersede AD 2018-18-05. Rather, we have determined that it is more appropriate to address the changes in the MCAI by proposing to require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations. Accomplishment of the proposed actions would then terminate all of the requirements of AD 2018-18-05.
EASA AD 2019-0256 describes new and more restrictive airworthiness limitations for airplane structure and systems.
This material is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to a bilateral agreement with the State of Design Authority, the FAA has been notified of the unsafe condition described in the MCAI referenced above. The FAA is proposing this AD because the agency evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.
This proposed AD would require revising the existing maintenance or inspection program, as applicable, to incorporate new or more restrictive airworthiness limitations, which are specified in EASA AD 2019-0256 described previously, as incorporated by reference. Any differences with EASA AD 2019-0256 are identified as
This proposed AD would require revisions to certain operator maintenance documents to include new actions (
In the FAA's ongoing efforts to improve the efficiency of the AD process, the FAA initially worked with Airbus and EASA to develop a process to use certain EASA ADs as the primary source of information for compliance with requirements for corresponding FAA ADs. The FAA has since coordinated with other manufacturers and civil aviation authorities (CAAs) to use this process. As a result, EASA AD 2019-0256 will be incorporated by reference in the FAA final rule. This proposed AD would, therefore, require compliance with EASA AD 2019-0256 in its entirety, through that incorporation, except for any differences identified as exceptions in the regulatory text of this proposed AD. Using common terms that are the same as the heading of a particular section in the EASA AD does not mean that operators need comply only with that section. For example, where the AD requirement refers to “all required actions and compliance times,” compliance with this AD requirement is not limited to the section titled “Required Action(s) and Compliance Time(s)” in the EASA AD.
Service information specified in EASA AD 2019-0256 that is required for compliance with EASA AD 2019-0256 will be available on the internet at
The FAA's new process, which uses MCAI ADs as the primary source of information for compliance with corresponding FAA ADs, has been limited to certain MCAI ADs (primarily those with service bulletins as the primary source of information for accomplishing the actions required by the FAA AD). However, the FAA is now expanding the process to include MCAI ADs that specify the incorporation of airworthiness limitation documents.
The previous format of the airworthiness limitation ADs included a paragraph that specified that no alternative actions (
The FAA estimates that this proposed AD affects 33 airplanes of U.S. registry. The FAA estimates the following costs to comply with this proposed AD:
The FAA estimates the total cost per operator for the retained actions from AD 2018-18-05 to be $7,650 (90 work-hours × $85 per work-hour).
The FAA has determined that revising the maintenance or inspection program takes an average of 90 work-hours per operator, although the agency recognizes that this number may vary from operator to operator. In the past, the agency has estimated that this action takes 1 work-hour per airplane. Since operators incorporate maintenance or inspection program changes for their affected fleet(s), the FAA has determined that a per-operator estimate is more accurate than a per-airplane estimate.
The FAA estimates the total cost per operator for the new proposed actions to be $7,650 (90 work-hours × $85 per work-hour).
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
The FAA has determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed above, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
The FAA must receive comments by April 13, 2020.
(1) This AD replaces the ADs identified in paragraphs (b)(1)(i) through (iii) of this AD.
(i) AD 2000-17-09, Amendment 39-11883 (65 FR 53897, September 6, 2000).
(ii) AD 2008-04-19 R1, Amendment 39-16069 (74 FR 56713, November 3, 2009).
(iii) AD 2015-26-09, Amendment 39-18357 (81 FR 1483, January 13, 2016).
(2) This AD affects AD 2018-18-05, Amendment 39-19384 (83 FR 44463, August 31, 2018) (“AD 2018-18-05”).
This AD applies to all ATR—GIE Avions de Transport Régional Model ATR42-200, -300, and -320 airplanes, certificated in any category.
Air Transport Association (ATA) of America Code 05, Time Limits/Maintenance Checks.
This AD was prompted by a determination that new or more restrictive airworthiness limitations are necessary. The FAA is issuing this AD to address reduced structural integrity of the airplane.
Comply with this AD within the compliance times specified, unless already done.
Except as specified in paragraph (h) of this AD: Comply with all required actions and compliance times specified in, and in accordance with, European Union Aviation Safety Agency (EASA) AD 2019-0256, dated October 17, 2019 (“EASA AD 2019-0256”).
(1) The requirements specified in paragraphs (1) and (3) of EASA AD 2019-0256 do not apply to this AD.
(2) Where paragraph (2) of EASA AD 2019-0256 refers to its effective date, this AD requires using the effective date of this AD.
(3) Paragraph (4) of EASA AD 2019-0256 specifies revising “the approved AMP” within 12 months after its effective date, but this AD requires revising the existing maintenance or inspection program, as applicable to incorporate the “limitations, tasks and associated thresholds and intervals” specified in paragraph (4) of EASA AD 2019-0256 within 90 days after the effective date of this AD.
(4) The initial compliance time for doing the tasks specified in paragraph (4) of EASA AD 2019-0256 is at the applicable “associated thresholds” specified in paragraph (4) of EASA AD 2019-0256, or within 90 days after the effective date of this AD, whichever occurs later.
(5) The provisions specified in paragraphs (5) and (6) of EASA AD 2019-0256 do not apply to this AD.
(6) The “Remarks” section of EASA AD 2019-0256 does not apply to this AD.
After the maintenance or inspection program has been revised as required by paragraph (g) of this AD, no alternative actions (
Accomplishing the maintenance or inspection program revision required by paragraph (g) of this AD terminates the requirements of AD 2018-18-05.
The following provisions also apply to this AD:
(1)
(2)
(3)
(1) For information about EASA AD 2019-0256, contact the EASA, Konrad-Adenauer-Ufer 3, 50668 Cologne, Germany; telephone +49 221 89990 6017; email
(2) For more information about this AD, contact Shahram Daneshmandi, Aerospace Engineer, International Section, Transport Standards Branch, FAA, 2200 South 216th St., Des Moines, WA 98198; telephone and fax 206-231-3220; email
Federal Aviation Administration (FAA), DOT.
Notice of proposed rulemaking (NPRM).
The FAA proposes to adopt a new airworthiness directive (AD) for Airbus Helicopters Model EC 155B and EC155B1 helicopters. This proposed AD would require modifying the wiring of the attitude and heading reference system (AHRS) connector. This proposed AD is prompted by a report of wiring of the AHRS contrary to approved design specifications. The actions of this proposed AD are intended to address an unsafe condition on these products.
The FAA must receive comments on this proposed AD by April 28, 2020.
You may send comments by any of the following methods:
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You may examine the AD docket on the internet at
For service information identified in this proposed rule, contact Airbus Helicopters, 2701 N. Forum Drive, Grand Prairie, TX 75052; telephone 972-641-0000 or 800-232-0323; fax 972-641-3775; or at
George Schwab, Aviation Safety Engineer, Safety Management Section, Rotorcraft Standards Branch, FAA, 10101 Hillwood Pkwy., Fort Worth, TX 76177; telephone 817-222-5110; email
The FAA invites you to participate in this rulemaking by submitting written comments, data, or views. The FAA also invites comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.
The FAA will file in the docket all comments received, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, the FAA will consider all comments received on or before the closing date for comments. The FAA will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. The FAA may change this proposal in light of the comments received.
EASA, which is the Technical Agent for the Member States of the European Union, has issued EASA AD No. 2018-0069, dated March 26, 2018 (EASA AD 2018-0069), to correct an unsafe condition for Airbus Helicopters Model EC 155 B and EC 155 B1 helicopters. EASA advises that the AHRS1 and AHRS2 on Model EC 155-series helicopters use the same flight/ground signal contrary to the approved design specification, which requires the AHRS1 and AHRS2 to use independent signals to ensure redundancy. EASA states that if AHRS1 and AHRS2 both receive an incorrect “ground” status due to a single failure while in flight, it will generate an error in the computation of the attitude and vertical speed and, as a result, an incorrect display of these indications to the flight crew. EASA advises that this condition, if not corrected, could lead to erroneous attitude and vertical speed indications, resulting in increased workload for the flight crew and reduced control of the helicopter during flight in instrument meteorological conditions (IMC).
Accordingly, EASA AD 2018-0069 requires modifying the connection of connector 11 ALPHA, and based on the helicopter configuration, also modifying the wiring to connector 11 ALPHA.
These helicopters have been approved by EASA and are approved for operation in the United States. Pursuant to the FAA's bilateral agreement with the European Union, EASA has notified the FAA about the unsafe condition described in its AD. The FAA is proposing this AD after evaluating all known relevant information and determining that an unsafe condition is likely to exist or develop on other helicopters of the same type designs.
The FAA reviewed Airbus Helicopters Alert Service Bulletin (ASB) No. EC155-34A033, Revision 2, dated January 30, 2018. This service information specifies re-allocating the electronic board output connections by modifying the wiring of connector 11 ALPHA for helicopters with modification (MOD) 0722B51 installed and modifying the wiring to connector 11 ALPHA for those helicopters that also have a combined voice and flight data recording system (MOD 0731B89) installed.
The FAA also reviewed Airbus Helicopters ASB No. EC155-34A037, Revision 0, dated February 19, 2018. This service information specifies installing MOD 0722B51 by modifying the wiring of connector 11 ALPHA to separate the flight/ground information so the left-hand landing gear flight information is also used by the automatic pilot system as well as but separately from the right-hand landing gear flight information. This service information also specifies re-allocating the electronic board output connections by modifying the wiring of connector 11 ALPHA.
This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the
The FAA also reviewed Airbus Helicopters ASB No. EC155-34A033, Revision 0, dated July 19, 2017, and Airbus Helicopters ASB No. EC155-34A033, Revision 1, dated October 9, 2017. Revisions 0 and 1 of this service information contain the same procedures for modifying the wiring as Revision 2. However, Revision 1 clarifies the applicable helicopter configurations and updates the post-modification testing procedures, and Revision 2 clarifies the post-modification test procedures and updates a figure.
This proposed AD would require, before further flight in IMC or within 660 hours time-in-service (TIS), whichever occurs first, modifying the wiring at connector 11 ALPHA based on the helicopter configuration and in accordance with specified portions of the applicable ASB.
The compliance time for the EASA AD is within 7 or 12 months depending on helicopter configuration. The compliance time for this proposed AD would be before further flight in IMC or within 660 hours TIS, whichever occurs first.
The FAA estimates that this proposed AD affects 17 helicopters of U.S. Registry. The FAA estimates that operators may incur the following costs in order to comply with this proposed AD. Labor costs are estimated at $85 per work-hour.
Modifying the wiring would take about 4 work-hours and parts would cost about $20 for an estimated cost of
Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.
The FAA is issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: General requirements. Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.
The FAA determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect on the States, on the relationship between the national Government and the States, or on the distribution of power and responsibilities among the various levels of government.
For the reasons discussed, I certify this proposed regulation:
(1) Is not a “significant regulatory action” under Executive Order 12866,
(2) Will not affect intrastate aviation in Alaska, and
(3) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.
Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.
Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:
49 U.S.C. 106(g), 40113, 44701.
This AD applies to Airbus Helicopters Model EC 155B and EC155B1 helicopters, certificated in any category.
This AD defines the unsafe condition as incorrect wiring of an attitude and heading reference system (AHRS). This condition could result in the display of misleading attitude and vertical speed information, and subsequent loss of control of the helicopter in instrument meteorological conditions (IMC).
The FAA must receive comments by April 28, 2020.
You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.
Before further flight in IMC or within 660 hours time-in-service, whichever occurs first:
(1) For helicopters with wiring change modification (MOD) 0722B51 installed, modify the wiring of connector 11 ALPHA as depicted in Figure 1 of Airbus Helicopters Alert Service Bulletin (ASB) No. EC155-34A033, Revision 2, dated January 30, 2018 (ASB EC155-34A033). If a combined voice and flight data recording system (MOD 0731B89) is installed, also modify the wiring to connector 11 ALPHA as depicted in Figure 2 of ASB EC155-34A033.
(2) For helicopters without wiring change MOD 0722B51 installed, modify the wiring of connector 11 ALPHA as depicted in Figure 1 and Figure 2 of Airbus Helicopters ASB No. EC155-34A037, Revision 0, dated February 19, 2018.
A special flight permit may be issued for operation under visual flight rules only.
(1) The Manager, Safety Management Section, Rotorcraft Standards Branch, FAA, may approve AMOCs for this AD. Send your proposal to: George Schwab, Aviation Safety Engineer, Safety Management Section, Rotorcraft Standards Branch, FAA, 10101 Hillwood Pkwy., Fort Worth, TX 76177; telephone 817-222-5110; email
(2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, the FAA suggests that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.
(1) Airbus Helicopters Alert Service Bulletin (ASB) No. EC155-34A033, Revision 0, dated July 19, 2017, and Airbus Helicopters ASB No. EC155-34A033, Revision 1, dated October 9, 2017, which are not incorporated by reference, contain additional information about the subject of this AD. For service information identified in this AD, contact Airbus Helicopters, 2701 N. Forum Drive, Grand Prairie, TX 75052; telephone 972-641-0000 or 800-232-0323; fax 972-641-3775; or at
(2) The subject of this AD is addressed in European Aviation Safety Agency (EASA) AD No. 2018-0069, dated March 26, 2018. You may view the EASA AD on the internet at
Joint Aircraft Service Component (JASC) Code: 3420, Attitude and Direction Data System.
Office of the Secretary (OST), U.S. Department of Transportation (DOT).
Notice of proposed rulemaking.
The U.S. Department of Transportation (Department or DOT) is seeking comment in this Notice of Proposed Rulemaking (NPRM) on a proposal that would codify definitions for the terms “unfair” and “deceptive” in the Department's regulations implementing its aviation consumer protection statute. While codifying these definitions into the Department's regulations would be new, the proposed definitions of “unfair” and “deceptive” reflect the Department's longstanding interpretation of the terms. This proposal would also require the
Comments should be filed by April 28, 2020. Late-filed comments will be considered to the extent practicable.
You may file comments identified by docket number DOT-OST-2019-0182 by any of the following methods:
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Robert Gorman, Senior Trial Attorney, or Kimberly Graber, Deputy Assistant General Counsel, or Blane Workie, Assistant General Counsel, Office of Aviation Enforcement and Proceedings, U.S. Department of Transportation, 1200 New Jersey Ave. SE, Washington, DC 20590, 202-366-9342, 202-366-7152 (fax);
The Department's authority to regulate unfair and deceptive practices in air transportation or the sale of air transportation is found at 49 U.S.C. 41712 (“Section 41712”) in conjunction with its rulemaking authority under 49 U.S.C. 40113, which states that the Department may take action that it considers necessary to carry out this part, including prescribing regulations. Section 41712 gives the Department the authority to investigate and decide whether an air carrier, foreign air carrier, or ticket agent is engaged in an unfair or deceptive practice in air transportation or the sale of air transportation. Under Section 41712, after notice and an opportunity for a hearing, the Department has the authority to issue orders to stop an unfair or deceptive practice. A different statute, 49 U.S.C. 46301, gives the Department the authority to issue civil penalties for violations of Section 41712 or for any regulation issued under the authority of Section 41712.
On February 24, 2017, President Trump signed Executive Order 13777, Enforcing the Regulatory Reform Agenda, which requires each agency to establish a Regulatory Reform Task Force to evaluate existing regulations, and make recommendations for their repeal, replacement, or modification. As part of this process, the Department is directed to seek input and assistance from entities significantly affected by its regulations. On October 1, 2017, the Department issued a Notice of Regulatory Reform seeking written input from the public on existing regulations and other agency actions that are good candidates for repeal, replacement, or modification.
A4A stated that the Department has relied on the phrase “unfair and deceptive practice” to issue detailed regulations and to take enforcement action without sufficient evidence that the practice at issue was actually unfair or deceptive. With respect to rulemaking, A4A stated that many of the Department's past consumer protection rulemakings were not based on evidence that the benefits of the rules outweighed their cost. More specifically, they recommended that DOT issue new regulations only where objective evidence shows that: (1) The regulation is necessary to prevent deceptive practices that are occurring or are reasonably likely to occur; (2) the practice is causing or would cause significant consumer harm if it did occur; and (3) market forces are unlikely to provide a remedy to such consumer harm.
With respect to enforcement, A4A similarly claimed that the Department's Office of Aviation Enforcement and Proceedings (Enforcement Office) has aggressively pursued enforcement action in cases involving minor infractions, inadvertent errors, or isolated incidents with little evidence of a “practice” or of significant consumer harm. A4A recommended that the Department should align its policies on unfairness and deception with the policies of the FTC, use evidence for its determinations, and not merely speculate or assume that actual consumer harm took place.
The Department has considered the issues raised by A4A. In addition, the Department recently issued updated procedural requirements for its rulemaking and enforcement actions. The Department's recently issued updated policies and procedures governing the development and issuance of regulations are set forth in
Further, enforcement actions taken pursuant to Section 41712 should be consistent with Subpart D of 49 CFR part 5, which includes the Department's procedural requirements for enforcement actions.
The Department's unfair and deceptive practices statute, Section 41712, is closely modeled after Section 5 of the FTC Act, 15 U.S.C. 45 (“Section 5”). As originally enacted in 1914, Section 5 granted the FTC authority to prohibit “unfair methods of competition” but did not address unfair or deceptive practices. Some early Supreme Court cases held that Section 5's prohibition on unfair methods of competition required a showing of harm to competitors and competition, but was not focused on addressing harm to consumers.
Section 5 grants the FTC broad enforcement authority to address unfair or deceptive acts or practices across a wide range of industries, but excludes the common carrier activities of air carriers and foreign air carriers from the FTC's jurisdiction. In 1938, the same year that Congress amended the FTC Act to proscribe unfair and deceptive practices, Congress passed the Civil Aeronautics Act. Section 411 of the Civil Aeronautics Act granted to the Civil Aeronautics Authority (CAA) the exclusive power to prohibit unfair and deceptive practices in air transportation. Section 41712 was previously codified as Section 411 but in 1994, as part of a comprehensive non-substantive reorganization of the Transportation Code, Section 411 was re-codified as Section 41712. Neither Section 5 of the FTC Act, nor Section 41712 (formerly Section 411), specifically defines “unfair or deceptive practices.” In 1940, the CAA's authority was transferred to the Civil Aeronautics Board (CAB). In 1952, Congress expanded the CAB's authority to include unfair or deceptive practices in the
The Federal Aviation Act of 1958 created the Federal Aviation Administration (FAA). This statute transferred safety authority to the FAA, but the CAB's authority over unfair or deceptive practices remained intact. In 1978, the Airline Deregulation Act (ADA) substantially deregulated the U.S. airline industry by prohibiting regulation of rates, routes, and services. The ADA did not alter the CAB's authority to prohibit unfair or deceptive practices, however.
Effective January 1, 1985, the CAB was abolished, and the CAB's authority to regulate unfair and deceptive practices was transferred to the Department.
Section 41712 grants the Department the authority to prohibit unfair or deceptive practices, and jurisdiction over air carriers and foreign air carriers lies exclusively with the Department because those entities were carved out of FTC jurisdiction in Section 5. However, the FTC's general Section 5 authority to prohibit unfair and deceptive practices applies to ticket agents in the sale of air transportation. As a result, the Department and the FTC have concurrent authority over ticket agents in the sale of air transportation.
The FTC Act does not specifically define “unfair or deceptive acts or practices,” but authorizes the FTC to define such acts and practices through enforcement and rulemaking. 15 U.S.C. 45; 15 U.S.C. 57a.
In December 1980, the FTC issued a Policy Statement to Congress, which articulated general principles drawn from FTC decisions and rulemakings that the Commission applies in enforcing its mandate to address unfairness under the FTC Act.
In 1994, Congress codified existing case law defining the elements of unfairness. Specifically, Congress enacted 15 U.S.C. 45(n), which states that the FTC shall have no enforcement authority or rulemaking authority to declare an act or practice unfair unless it is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition. Congress further provided in section 45(n) that the FTC could rely on public policy, along with other evidence, for making a determination of unfairness,
In 1983, the FTC issued a Policy Statement on Deception.
Congress has not enacted the FTC's 1983 Policy Statement on Deception into law, unlike the FTC's 1980 Policy Statement on Unfairness, but the Policy Statement was adopted by the FTC in formal adjudication,
The FTC enforces a broad range of consumer protection laws affecting most of the country's commercial entities, with some exceptions such as airlines. The FTC Act prescribes several specific statutory requirements for issuing rules prohibiting an act or practice as unfair or deceptive. As described above, to issue a rule defining an act or practice as unfair, FTC must first determine that the act or practice is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition.
There are no comparable statutory requirements for rulemaking by the Department finding a practice to be unfair or deceptive. Under 49 U.S.C. 40113, Congress granted the Secretary of Transportation the authority to take action that he or she considers necessary to carry out his or her statutory duties, including prescribing regulations and issuing orders. Like other Federal agencies, the Department is subject to the general provisions of the Administrative Procedure Act when issuing regulations. The Department is also subject to the rulemaking procedures found in Subpart B of 49 CFR part 5.
This rulemaking would codify the Department's definitions of “unfair” and “deceptive” when engaging in aviation consumer protection rulemaking or enforcement action under the authority of Section 41712. This rulemaking would also require the Department to follow certain procedures when engaging in aviation consumer protection rulemaking and enforcement. For example, this rulemaking would require the Department to provide an explanation of how specific conduct meets the standard for an “unfair” or “deceptive” practice when engaging in an aviation consumer protection rulemaking or enforcement action, as further described below.
When the Department issued its existing aviation consumer protection rules, the Department followed the Administrative Procedure Act and related statutory and administrative requirements to ensure that these rules are authorized by law and justified on a benefit-cost basis. However, more can be done to better inform the public and regulated entities how the Department determines what constitutes an unfair and deceptive practice when issuing discretionary aviation consumer protection rulemakings under the authority of Section 41712 and when issuing enforcement orders based on Section 41712 where there has not been a regulation that already specifies required or prohibited conduct.
This proposed rule would define the terms “unfair” and “deceptive” for aviation consumer protection enforcement or rulemaking actions brought pursuant to Section 41712. First, it would define a practice as “unfair” if it causes or is likely to cause substantial injury, which is not reasonably avoidable, and the harm is not outweighed by benefits to consumers or competition. Second, the proposed rule would define a practice as “deceptive” if it is likely to mislead a consumer acting reasonably under the circumstances with respect to a material issue. Under the proposal, an issue is “material” if it is likely to have affected the consumer's conduct or decision with respect to a product or service. These definitions mirror the definitions used by the FTC.
The Department has used its general authority to prohibit unfair or deceptive practices of air carriers, foreign air carriers, and ticket agents to conduct oversight in the area of airline privacy
The proposal makes clear that proof of intent is not necessary to establish unfairness or deception. In other words, the Department is not required to find that an air carrier or ticket agent acted with the intent to cause harm before finding a practice to be unfair to a consumer. Likewise, it is not necessary for the Department to find that an air carrier, foreign air carrier, or ticket agent acted with the intent to deceive before finding such a practice is deceptive. These principles are reflected in Federal case law applying Section 5 of the FTC Act. In addition, under the FTC Act, disseminating false advertisements, or causing false advertisements to be disseminated, is an unfair or deceptive act or practice. 15 U.S.C. 52. The FTC Act, and its definition of “false advertisement,” make no reference to intent to deceive.
Section 5 of the FTC Act prohibits unfair “
This proposed rule would add a new section 399.75 to 14 CFR 399 Subpart F (Policies Relating to Rulemaking Proceedings). The proposed rule would state that when the Department issues a new discretionary aviation consumer protection rulemaking declaring that a specific practice in air transportation or the sale of air transportation is unfair or deceptive within the meaning of Section 41712, the Department shall employ the definitions of “unfair” and “deceptive” that are set forth in new Section 399.79. These definitions are consistent with the Department's past practice and are based on FTC case precedent and policy.
In this NPRM, the Department proposes to apply formal hearing procedures for discretionary aviation consumer protection rulemakings issued under the authority of Section 41712 that are not defined as high-impact or economically significant within the meaning of the Department's regulatory procedures found in 49 CFR 5.17(a). Any such high-impact or economically significant rulemakings are subject to the special procedures outlined in 49 CFR 5.17.
The Department proposes to adopt formal hearing procedures for discretionary aviation consumer protection rulemakings similar to the formal hearing procedures that apply to high-impact and economically significant rulemakings. These procedures would allow interested parties to request a formal hearing before the Department issues a final aviation consumer protection rule. These formal hearing procedures would not apply to rulemakings specifically mandated by Congress. Rather, they would apply to discretionary aviation consumer protection rulemakings, where the Department proposes to declare specific practices to be unfair or deceptive. The addition of formal hearing procedures is also consistent with Section 41712(a), which requires notice and an opportunity for a hearing before a finding that an air carrier, foreign air carrier, or ticket agent is engaged in an unfair or deceptive practice or unfair method of competition.
The purpose of the formal hearing would be to address disputed issues of fact through the presentation of testimony and written submissions in front of a neutral administrative hearing officer. The Department is proposing to allow interested parties to request a formal hearing if one or more scientific, technical, economic or other factual issues are in dispute. Interested parties would be permitted to make such a request to the Department's General Counsel after the notice of proposed rulemaking is filed, but before the end of the comment period. In general, the purpose of the formal hearing is to ensure that rules are based on facts and not unfounded assumptions. The formal hearing would provide an opportunity to explore complex or disputed factual issues before proceeding beyond the proposed rule stage. The Department would use the developed factual record of the formal hearing to determine whether the rulemaking should proceed as originally proposed, be modified, or be terminated entirely.
Under this proposal, for a formal hearing to be granted, the interested party would be required to make a plausible initial showing that the rulemaking concerns one or more specific scientific, technical, economic, or other factual issues that are in dispute, that the ordinary notice and comment process is insufficient to provide an adequately informed judgment on the issue, and that resolution of the issue would have a material effect on the costs and benefits of the rule. Under the delegation of authority to the General Counsel to conduct rulemakings on these matters found in 49 CFR 1.27(n), the General Counsel would be authorized to deny a hearing, even if the interested party makes the plausible initial showing described above, so long as the General Counsel determines that the requested hearing would not in fact advance the consideration of the proposed rule, or that the hearing would unreasonably delay completion of the rulemaking. The General Counsel would explain in writing the basis of that decision.
Under this proposal, if the Department grants the request for a hearing, the Department would publish
Also, the NPRM specifies that after the formal hearing and after the record is closed, the presiding hearing officer would render a report containing findings and conclusions addressing the disputed issues of fact identified in the hearing notice. Interested participants in the formal hearing would have the opportunity to file statements of agreement or objection in response to the hearing officer's report. The Department would then consider the record of the formal hearing and determine whether to terminate the rulemaking, proceed with it as proposed, or modify the proposed rule. If the Department decides either to proceed with the rule as originally proposed, or to terminate the rulemaking, the Department would explain those decisions in writing. If the Department decides to modify the proposed rule in light of the formal hearing, then the Department would issue a new or supplemental NPRM, and explain its decision in the preamble to that modified proposal. Finally, this NPRM clarifies that the formal hearing procedures shall not impede or interfere with the interagency rulemaking review process of the Office of Information and Regulatory Affairs. The Department solicits input on whether the public and regulated entities find the Department's utilization of this type of process for the promulgation of unfair and deceptive regulations to be helpful and, if so, how. Further, if this process would not be helpful, the Department solicits comment on what elements of these proposed procedures should be modified, and why.
This proposal states that when the Department issues a discretionary aviation consumer protection rulemaking declaring a practice to be unfair or deceptive, it shall explain the basis for its conclusion that the practice is unfair or deceptive. The intent is to ensure that when issuing new aviation consumer protection regulations under the authority of Section 41712, the Department provides greater transparency to the public and to regulated entities about the reasons supporting the Department's finding that a practice is unfair or deceptive. For example, if the Department proposes a final rule determining that a particular practice is unfair, the Department would be required to explain how the practice is likely to cause substantial injury, which is not reasonably avoidable, and that the harm is not outweighed by benefits to consumers or to competition. The Department's explanation would provide its basis for reaching that conclusion. Similarly, when proposing a rulemaking finding a particular practice deceptive, the Department would follow the same practice of outlining the factors of deception and the basis for its conclusion.
The Department solicits comment on the support needed for rulemakings finding a practice unfair or deceptive. The proposed rule does not specifically indicate the type or extent of evidence that would be necessary to support a finding of unfairness or deception. In many instances, the Department identifies issues that may be problematic and addresses them in an aviation consumer protection rulemaking as an unfair or deceptive practice based on information in the Department's consumer complaint database. In other instances, aviation consumer protection rulemaking is instituted in response to recommendations from entities such as consumer advocates or advisory committees. The Department envisions that the formal hearing procedures described above will provide another means of gathering information, data, and evidence that may be helpful in making these determinations. What type of evidence should be necessary to demonstrate that a practice is unfair or deceptive to support the Department issuing a rule prohibiting that practice? How should the Department gather that information? During the rulemaking process, consumers may comment that a practice is harmful while regulated entities may disagree. In those instances, how should the Department determine whether a practice is harmful?
The Department is proposing to codify a longstanding practice of the Department with regard to aviation consumer protection enforcement proceedings. Specifically, proposed paragraph 399.79(e) states that, before issuing an order finding that an air carrier, foreign air carrier, or ticket agent violated any regulation issued under the authority of Section 41712, or Section 41712 itself, the Department shall afford the party the opportunity to present evidence in support of its position. For example, under current practice, the party is permitted to present evidence tending to establish that: (1) The regulation at issue was not violated; (2) the violation took place, but mitigating circumstances apply; (3) the conduct at issue was not unfair or deceptive (in cases where a consumer protection regulation does not already apply to the conduct at issue); and (4) consumer harm was limited, or that the party has taken steps to mitigate past or future consumer harm (for example, by issuing compensation and/or refunds to affected passengers, or by implementing innovative practices and procedures to ensure that the violations will not recur). This list is intended to provide examples, but not to be complete or exhaustive. The Enforcement Office considers all information provided when determining whether a violation of aviation consumer rights took place and, if a violation took place, the appropriate civil penalty to seek for the violations at issue. The Department has incorporated the opportunity to present relevant evidence and mitigating circumstances into its proposal.
Paragraph 399.79(e) applies to informal nonpublic investigations of potential violations of aviation consumer rights, which represent the overwhelming majority of the Enforcement Office's enforcement efforts.
Many of the Department's aviation consumer protection regulations that are issued under the authority of Section 41712 state that a violation of the rule amounts to an unfair and deceptive practice. For example, the tarmac delay rule states that covered carriers must adopt and adhere to contingency plans providing various assurances to consumers in the event of a lengthy tarmac delay.
In instances where an enforcement action is based on regulations issued under the authority of Section 41712, the Department's enforcement orders set forth the relevant regulation or regulations, describe the facts of the case, including the problematic conduct, and identify the manner in which the regulation has been violated. In such orders, there is typically a statement that a violation of the regulation is also considered an unfair and deceptive practice in violation of Section 41712. In such cases, the orders have not explained in detail how the practice is unfair and deceptive, because the underlying regulation was issued under the authority of Section 41712.
The Department also has the authority to investigate and enforce where an air carrier, foreign air carrier, or ticket agent may be engaging in conduct that does not violate a specific consumer protection regulation, but which may nevertheless be unfair or deceptive to consumers. These are potential “standalone” violations of Section 41712 and such cases are infrequent. When deciding whether to take enforcement action in these matters, the Department has relied on the FTC's approach to both unfairness and deception. Departmental orders issued in cases where the Department declined to take action have explicitly recited FTC precedent in the course of explaining why the acts were not unfair or deceptive. For example, in a case against a large airline, DOT Order 2016-12-11 (2016), a passenger filed a formal complaint alleging that the airline improperly penalized him 60,000 frequent flyer miles when it wrongly accused him of manipulating the airline's website to gain favorable seating upgrades. The passenger was flagged by the airline's security department for engaging in suspicious activity on its website. While no regulation covered the airline's behavior, the Department applied the standard articulated in the FTC's Policy Statement on Unfairness and relevant precedent and found that the harm of losing miles, while substantial, could have been reasonably avoided by not logging into the airline's website in suspicious and unusual ways.
The Department has also issued orders finding that violations of civil rights laws constitute violations of Section 41712, without explaining in detail how the violations were either unfair or deceptive,
In this NPRM, we propose that when the Department issues an enforcement order relying on Section 41712, and where no existing regulation governs the practice in question (where the Department relies solely on the phrase “unfair or deceptive” in Section 41712), then the enforcement order must articulate the Department's basis for concluding that the practice is unfair or deceptive, as defined in this rule. For example, if the Department issues an order declaring that a particular practice is unfair, the Department would be required to explain that the practice is likely to cause substantial injury, which is not reasonably avoidable, and that the harm is not outweighed by benefits to consumers or competition. The Department would be required not only to recite these conclusions, but also to recite the basis for how it arrived at those conclusions. The proposed rule makes clear that when the conduct of an air carrier, foreign air carrier, or ticket agent also violates a regulation that was
The Department is undertaking this rulemaking because it is appropriate to provide an explanation, in enforcement orders, of the basis for concluding that a practice either does or does not violate Section 41712. Specifically, this rulemaking proposes that enforcement orders will identify the factors used to determine whether a practice is unfair or deceptive and will identify the facts and conduct relevant to each factor, so that the rationale for the determination is clear in the order. This is particularly important in orders based on Section 41712 alone, where there has not been a regulation that already specifies required or prohibited conduct. In cases involving conduct that violates a regulation that was issued under the authority of Section 41712, enforcement orders should continue to identify the relevant facts and conduct that violates the regulation at issue. For example, in a case involving a violation of the Department's oversales rule, the specific facts and conduct at issue should be stated and the rationale for a determination that the oversales rule has been violated should be clear. However, this rulemaking is not proposing changes to enforcement orders regarding violations of existing regulations. The new proposed requirement regarding explaining the standards for unfairness and deception that are stated in this rulemaking and rely on FTC precedent are reflected in new proposed Section 399.79.
The proposed rule does not specifically indicate the type or extent of evidence that would be necessary to support a finding of unfairness or deceptiveness for standalone violations of Section 41712. The Department solicits comment on this question.
Finally, the Department seeks comment on the benefits and costs of this rule. The Department's description of the benefits and costs are described immediately below in Section A of the Regulatory Analyses and Notices section.
This proposed rule is not a significant regulatory action under section 3(f) of E.O. 12866 (58 FR 51735, October 4, 1993), Regulatory Planning and Review, as supplemented by E.O. 13563 (76 FR 3821, January 21, 2011), Improving Regulation and Regulatory Review. Accordingly, the Office of Management and Budget (OMB) has not reviewed it under that Order. It is also not significant within the meaning of DOT regulatory policies and procedures. This NPRM is issued in accordance with the Department's rulemaking procedures found in 49 CFR part 5 and DOT Order 2100.6.
The Department does not anticipate that this rulemaking will have an economic impact on regulated entities. This is primarily a rule of agency procedure and interpretation. The NPRM would clarify how the Department interprets the terms “unfair” and “deceptive,” and potentially require enhanced departmental procedures in analyzing, enforcing, and regulating in this area. This rulemaking could impose a social cost on the public if increased procedural requirements are adopted, as the opportunity cost of these enhanced procedural requirements could translate into the Department performing fewer enforcement and rulemaking actions. In addition, enhanced procedures would likely lengthen the time needed to complete these actions. However, the Department anticipates that these social costs would be outweighed by the benefits associated with improved and more transparent departmental decision making, informed by enhanced analyses and public participation. The Department seeks comment on the costs, benefits, and cost savings associated with this rulemaking.
This proposed rule is not expected to be an E.O. 13771 regulatory action because this proposed rule is not significant under E.O. 12866.
The Regulatory Flexibility Act (5 U.S.C. 601
This NPRM has been analyzed in accordance with the principles and criteria contained in Executive Order 13132 (“Federalism”). This NPRM does not include any provision that: (1) Has substantial direct effects on the States, the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government; (2) imposes substantial direct compliance costs on State and local governments; or (3) preempts State law. States are already preempted from regulating in this area by the Airline Deregulation Act, 49 U.S.C. 41713. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.
This NPRM has been analyzed in accordance with the principles and criteria contained in Executive Order 13175 (“Consultation and Coordination with Indian Tribal Governments”). Because this NPRM does not significantly or uniquely affect the communities of the Indian Tribal governments or impose substantial direct compliance costs on them, the funding and consultation requirements of Executive Order 13175 do not apply.
The Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501
The Department has determined that the requirements of Title II of the Unfunded Mandates Reform Act of 1995 do not apply to this rulemaking.
The Department has analyzed the environmental impacts of this proposed action pursuant to the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321
Consumer protection, Policies, Rulemaking proceedings, Enforcement, Unfair or deceptive practices.
For the reasons discussed in the preamble, the Department proposes to amend 14 CFR part 399 as follows:
49 U.S.C. 41712, 40113(a).
(a)
(b)
(1)
(2)
(i) The proposed rule depends on conclusions concerning one or more specific scientific, technical, economic, or other factual issues that are genuinely in dispute or that may not satisfy the requirements of the Information Quality Act;
(ii) The ordinary public comment process is unlikely to provide an adequate examination of the issues to permit a fully informed judgment; and
(iii) The resolution of the disputed factual issues would likely have a material effect on the costs and benefits of the proposed rule.
(3)
(i) The requested hearing would not advance the consideration of the proposed rule and the General Counsel's ability to make the rulemaking determinations required by this section; or
(ii) The hearing would unreasonably delay completion of the rulemaking.
(4)
(5)
(6)
(ii) The General Counsel shall arrange for an administrative judge or other neutral administrative hearing officer to preside over the hearing and shall provide a reasonable opportunity to question the presenters.
(iii) After the formal hearing and after the record of the hearing is closed, the hearing officer shall render a report containing findings and conclusions addressing the disputed issues of fact identified in the hearing notice.
(iv) Interested parties who participated in the hearing shall be given an opportunity to file statements of agreement or objection in response to the hearing officer's report. The complete record of the hearing shall be made part of the rulemaking record.
(7)
(ii) If the General Counsel decides to terminate the rulemaking, the General Counsel shall publish a notice in the
(iii) If the General Counsel decides to finalize the proposed rule without material modifications, the General Counsel shall explain the reasons for the decision and its responses to the hearing record in the preamble to the final rule.
(iv) If the General Counsel decides to modify the proposed rule in material respects, the General Counsel shall publish a new or supplemental Notice of Proposed Rulemaking in the
(8) The formal hearing procedures under this paragraph shall not impede or interfere with the interagency review process of the Office of Information and Regulatory Affairs for the proposed rulemaking.
(c)
(a)
(b)
(2) A practice is “deceptive” to consumers if it is likely to mislead a consumer, acting reasonably under the circumstances, with respect to a material matter. A matter is material if it is likely to have affected the consumer's conduct or decision with respect to a product or service.
(c)
(d)
(e)
(i) In cases where a specific regulation applies, evidence tending to establish that the regulation at issue was not violated and, if applicable, that mitigating circumstances apply;
(ii) In cases where a specific regulation does not apply, evidence tending to establish that the conduct at issue was not unfair or deceptive as defined in paragraph (b); and
(iii) Evidence tending to establish that consumer harm was limited, or that the air carrier, foreign air carrier, or ticket agent has taken steps to mitigate consumer harm.
(2) During this informal process, if the Office of Aviation Enforcement and Proceedings reaches agreement with the alleged violator to resolve the matter with the issuance of an order declaring a practice in air transportation or the sale of air transportation to be unfair or deceptive to consumers under the authority of 49 U.S.C. 41712(a), and when a regulation issued under the authority of section 41712 does not apply to the practice at issue, then the Department shall articulate in the order the basis for concluding that the practice is unfair or deceptive to consumers as defined in this section.
(f)
49 U.S.C. 41712; 49 U.S.C. 40113(a).
Federal Energy Regulatory Commission, DOE.
Withdrawal of advance notice of proposed rulemaking; denial of petition for rulemaking.
The Federal Energy Regulatory Commission (Commission) is withdrawing its advance notice of proposed rulemaking (ANOPR) considering potential modifications to the Commission's policies for evaluating oil pipeline indexed rate changes and certain additions to the annual reporting requirements in FERC Form No. 6, page 700. Additionally, the Commission denies the petition for rulemaking filed by certain shippers seeking changes to page 700 reporting requirements.
The ANOPR published on November 2, 2016, at 81 FR 76315 (2016) is withdrawn as of February 28, 2020.
1. On October 20, 2016, the Commission issued an advance notice of proposed rulemaking (ANOPR) in Docket No. RM17-1 seeking comment regarding potential modifications to the Commission's policies for evaluating oil pipeline indexed rate changes and certain additions to the FERC Form No. 6, page 700 (page 700) annual reporting requirements.
2. For the reasons set forth below, we exercise our discretion to withdraw the ANOPR and to terminate the proceeding in Docket No. RM17-1. We also deny the shippers' petition for rulemaking.
3. In 2015, the Liquids Shippers Group,
4. The October 2016 ANOPR resulted from the Commission's ongoing assessment of its oil pipeline policies, including evaluation of page 700 reporting requirements following the Joint Shippers' petition. In the ANOPR, the Commission sought comment regarding potential modifications to its policies for reviewing protests and complaints against oil pipeline index rate filings. In addition, the Commission sought comment regarding potential modifications to the data reporting requirements reflected on page 700. Initial comments were filed in January 2017
5. Upon review of the record developed in this proceeding, we are not persuaded to proceed with the changes considered in either the ANOPR or the Joint Shippers' petition.
6. Regarding the Joint Shippers' petition, the Commission previously identified concerns with the petition's proposal for (a) requiring supplemental page 700s for different rate design segments
Whereas this proposal would provide some minimal benefit to shippers, under our simplified indexing regime, it would impose considerable industry-wide cost upon pipelines.
7. We also deny the Joint Shippers' request for supplemental page 700s that separately report crude oil and product pipeline system cost-of-service data. After further consideration of this proposal as part of the ANOPR proceeding, we conclude that imposing such an annual cost-of-service reporting obligation is unnecessary for the purposes of a preliminary screen in the Commission's simplified indexing regime. Segmentation of page 700 by crude and product would apply to a limited number of pipeline filers.
8. We also decline to adopt the proposal contemplated in the ANOPR that pipelines file supplemental page 700s for non-contiguous and major rate design systems.
9. Finally, regarding the ANOPR's proposal to disaggregate revenue and throughput data between cost and non-cost based-rates,
10. In declining to adopt these additional reporting obligations on page 700, we seek to preserve the intent of the Energy Policy Act of 1992 to ensure a simplified ratemaking regime. While these changes to page 700 would require pipelines to provide more cost-of-service information in their annual filings, the Commission's primary oil pipeline ratemaking regime is indexing, not cost of service.
11. We also decline to adopt the proposals in the ANOPR for modifying the Commission's policies for addressing protests and complaints against index rate increases. However, the Commission discusses some potential changes to these policies in our concurrent order in
12. Accordingly, we exercise our discretion to withdraw the ANOPR and to terminate the proceeding in Docket No. RM17-1. Similarly, we also deny the Joint Shippers' petition for rulemaking. We continue to monitor and evaluate the Commission's oil pipeline policies, and value the comments filed by participants in these proceedings. This input will be considered in our ongoing effort to identify potential enhancements to our regulatory policies and processes.
By direction of the Commission. Commissioner Glick is dissenting with a separate statement attached.
GLICK, Commissioner,
I am dissenting from today's order withdrawing the Advance Notice of Proposed Rulemaking (ANOPR) and denying shippers' petition for rulemaking, because the Commission must do more to ensure shippers and the Commission have the information necessary to protect against unjust and reasonable oil pipeline rates.
The Commission is responsible for ensuring that the rates oil pipelines charge are just and reasonable. Through the ANOPR, the Commission sought to enhance the transparency of information reported on FERC Form No. 6, page 700, to ensure the public can effectively assess the reasonableness of oil pipeline rates and so that the Commission can “better fulfill its statutory obligations under the ICA.”
In the ANOPR, the Commission proposed to require pipelines to report more granular data, so that shippers could use the information to compare the rate they are being charged “with costs that are more closely associated with that particular rate.”
In light of the Commission's historic practice of relying on shippers to challenge rates rather than initiate its own investigations where the rates charged may no longer be just and reasonable, it is imperative that the Commission ensure shippers have access to the information they need to carry out this essential check. In today's order, the Commission fails to fulfill its last remaining responsibility to ensure oil pipeline rates remain just and reasonable.
For these reasons, I respectfully dissent.
Food and Drug Administration, HHS.
Proposed rule; extension of comment period for the proposed rule and for its information collection provisions.
The Food and Drug Administration (FDA or we) is extending the comment period for the proposed rule, and for the information collection related to the proposed rule, entitled “Laboratory Accreditation for Analyses of Foods” that appeared in the
FDA is extending the comment period on the proposed rule published November 4, 2019 (84 FR 59452). Submit either electronic or written comments on the proposed rule by April 6, 2020. Submit comments on information collection issues under the Paperwork Reduction Act of 1995 (PRA) by April 6, 2020 (see the “Paperwork Reduction Act of 1995” section).
You may submit comments as follows. Please note that late, untimely filed comments will not be considered. Electronic comments must be submitted on or before April 6, 2020. The
Submit electronic comments in the following way:
•
• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).
Submit written/paper submissions as follows:
•
• For written/paper comments submitted to the Dockets Management Staff, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”
• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on
Timothy McGrath, Staff Director, Food and Feed Laboratory Operations, Office of Regulatory Affairs, Food and Drug Administration, 12420 Parklawn Dr., Rm. 3142, Rockville, MD 20857, 301-796-6591, email:
In the
FDA has received a request for a 30-day extension of the comment period on the proposed rule to allow interested persons additional time to consider the proposal. FDA has considered the request and is granting the extension of the comment period to allow interested persons additional opportunity to consider the proposal. We also are extending the comment period for the information collection provisions to make the comment period for the information collection provisions the same as the comment period for the provisions of the proposed rule. To clarify, FDA is requesting comment on all issues raised by the proposed rule. The Agency believes that this extension allows adequate time for any interested persons to fully consider the proposal and submit comments.
Alcohol and Tobacco Tax and Trade Bureau, Treasury.
Notice of proposed rulemaking.
The Alcohol and Tobacco Tax and Trade Bureau (TTB) proposes to establish the approximately 200 square-mile “Verde Valley” viticultural area in Yavapai County, Arizona. The proposed viticultural area is not located within, nor does it contain, any other established viticultural area. TTB designates viticultural areas to allow vintners to better describe the origin of their wines and to allow consumers to better identify wines they may purchase. TTB invites comments on this proposed addition to its regulations.
Comments must be received by April 28, 2020.
You may electronically submit comments to TTB on this proposal, and view copies of this
Karen A. Thornton, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW, Box 12, Washington, DC 20005; phone 202-453-1039, ext. 175.
Section 105(e) of the Federal Alcohol Administration Act (FAA Act), 27 U.S.C. 205(e), authorizes the Secretary of the Treasury to prescribe regulations for the labeling of wine, distilled spirits, and malt beverages. The FAA Act provides that these regulations should, among other things, prohibit consumer deception and the use of misleading statements on labels and ensure that labels provide the consumer with adequate information as to the identity and quality of the product. The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers the FAA Act pursuant to section 1111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has delegated the functions and duties in the administration and enforcement of these provisions to the TTB Administrator through Treasury Order 120-01, dated December 10, 2013 (superseding Treasury Order 120-01, dated January 24, 2003).
Part 4 of the TTB regulations (27 CFR part 4) authorizes TTB to establish definitive viticultural areas and regulate the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) sets forth standards for the preparation and submission of petitions for the establishment or modification of American viticultural areas (AVAs) and lists the approved AVAs.
Section 4.25(e)(1)(i) of the TTB regulations (27 CFR 4.25(e)(1)(i)) defines a viticultural area for American wine as a delimited grape-growing region having distinguishing features, as described in part 9 of the regulations, and a name and a delineated boundary, as established in part 9 of the regulations. These designations allow vintners and consumers to attribute a given quality, reputation, or other characteristic of a wine made from grapes grown in an area to the wine's geographic origin. The establishment of AVAs allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of an AVA is neither an approval nor an endorsement by TTB of the wine produced in that area.
Section 4.25(e)(2) of the TTB regulations (27 CFR 4.25(e)(2)) outlines the procedure for proposing an AVA and provides that any interested party may petition TTB to establish a grape-growing region as an AVA. Section 9.12 of the TTB regulations (27 CFR 9.12) prescribes standards for petitions for the establishment or modification of AVAs. Petitions to establish an AVA must include the following:
• Evidence that the area within the proposed AVA boundary is nationally or locally known by the AVA name specified in the petition;
• An explanation of the basis for defining the boundary of the proposed AVA;
• A narrative description of the features of the proposed AVA affecting viticulture, such as climate, geology, soils, physical features, and elevation, that make the proposed AVA distinctive and distinguish it from adjacent areas outside the proposed AVA boundary;
• The appropriate United States Geological Survey (USGS) map(s) showing the location of the proposed AVA, with the boundary of the proposed AVA clearly drawn thereon; and
• A detailed narrative description of the proposed AVA boundary based on USGS map markings.
TTB received a petition from the Verde Valley Wine Consortium, on behalf of the local grape growers and winemakers, proposing to establish the approximately 200 square-mile “Verde Valley” AVA in Yavapai County, Arizona. The petition notes that the entire geological feature known as “Verde Valley” encompasses approximately 714 square miles, most of which is National Forest land. The proposed AVA, however, encompasses a much smaller area and excludes much of the public lands that are unavailable for viticulture. Although an effort was made to exclude as many public lands from the proposed AVA as possible, including Montezuma's Castle and Montezuma's Well National Monuments and the Prescott and Coconino National Forests, approximately 33 percent of the land within the proposed Verde Valley AVA is still part of either the Prescott or Coconino National Forests. The petition states that it was not practical to draw a boundary that would exclude all Federal land because several of the vineyards within the proposed AVA are “islands” of private land surrounded on all sides by Federal land. The petition states that even with the amount of Federal land remaining within the proposed AVA, there is still plenty of privately owned land available for vineyards within the proposed boundaries.
The proposed AVA currently has 24 commercial vineyards, covering a total of approximately 125 acres. According to the petition, several existing vineyards are planning to expand by a total of an estimated 40 acres in the near future. In addition, there are 11 wineries located within the proposed AVA.
According to the petition, the distinguishing features of the proposed Verde Valley AVA are its climate, soils, and topography. The petition also included information about the geology of the proposed AVA. However, because the petition did not compare the geology of the proposed AVA to that of the surrounding regions and did not describe the effect geology has on viticulture, TTB does not consider geology to be a distinguishing feature of the proposed AVA. Unless otherwise noted, all information and data pertaining to the proposed AVA contained in this proposed rule come from the petition for the proposed Verde Valley AVA and its supporting exhibits.
The proposed Verde Valley AVA is located within the larger valley of the Verde River in central Arizona. According to the petition, the region of the proposed AVA has been referred to as “Verde Valley” since 1583, when the Spanish explorer Antonio de Espejo recorded his travels in the area. With the passing of the Homestead Act in 1862, which granted land in the area to settlers who were willing make productive use of the land, pioneers began moving to the region and settled the town of Camp Verde. Later, Fort Verde was built to provide military protection for the residents.
The petition included several examples of written works that refer to the “Verde Valley.” An early geological study of the region, published in 1890,
The petition also included several photographs of local businesses and organizations that use the term “Verde Valley” in their names. For example, the Verde Valley Fire District, Verde Valley Medical Center, and Verde Valley Montessori School all serve the region of the proposed AVA. The local newspaper, the
The proposed Verde Valley AVA is located in Yavapai County, Arizona, approximately 100 miles north of the Phoenix metropolitan area. The Verde River flows through the center of the valley from northwest to southeast, and steep foothills rise up around the valley. The northern boundary separates the proposed AVA from the Coconino National Forest. The northern boundary primarily follows the 3,800-foot elevation contour because, according to the petition, the terrain becomes too steep for cultivation above that elevation. The proposed eastern boundary follows a series of elevation contours to separate the proposed AVA from extremely steep terrain, as well as from the public lands within the Coconino National Forest and Montezuma's Well and Montezuma's Castle National Monuments. The proposed southern boundary follows section lines on the U.S.G.S. topographic maps because, according to the petition, there were no other consistent features on the map to follow. The petition states that most of the land south of the proposed boundary is uninhabited and is part of the Coconino National Forest. The proposed western boundary primarily follows the 3,800-foot elevation contour, to exclude the steeper terrain of the Black Hills range and the public lands within the Prescott National Forest.
The distinguishing features of the proposed Verde Valley AVA are its climate, soils, and topography.
The petition included information on the annual precipitation amounts, temperatures in degrees Fahrenheit (F), and growing degree day
Average annual rainfall amounts within the proposed Verde Valley AVA are significantly lower than in the surrounding regions. Due to the low rainfall amounts, vineyard owners within the proposed AVA must use irrigation to ensure adequate hydration for their vines. The petition states that there are sufficient sources of groundwater within the proposed AVA for irrigation, and vineyard owners also employ water conservation methods such as drip irrigation and the use of agriculturally approved reclaimed water.
Temperatures within the proposed Verde Valley AVA are warmer than in each of the surrounding regions and provide suitable heat and sunlight for photosynthesis. The warm daytime temperatures lead to high annual GDD accumulations. According to the petition, the temperatures and GDD accumulations within the proposed AVA are best suited for growing warm-climate grapes such as Syrah, Cabernet
Finally, the petition included a discussion of the difference between the daytime high temperatures and nighttime low temperatures within the proposed AVA and the surrounding regions. The petition referred to these temperature differences as “diurnal temperature swings.” Although temperatures in the proposed AVA are high during the daytime, cool nighttime air drains into the proposed AVA from the surrounding higher elevations and lowers the nighttime temperatures. As a result, the difference between daytime high temperatures and nighttime low temperatures within the proposed AVA can exceed 30 degrees F, which is a greater difference than found in any of the surrounding regions. According to the petition, such a significant drop in nighttime temperatures delays grape ripening, lessens the respiration of acids, and increases phenolic development in the grapes. The following tables show the mean diurnal temperature swings for each month during the growing season for the years 2014 to 2016.
The soils within the proposed Verde Valley AVA are primarily alluvial soils. According to the petition, the majority of the soils within the proposed AVA are of the Altar, Mule, Cornville, Anthony, Retriever, House Mountain, Cowan, and Arizo soil series. The composition of these soils ranges from very fine sandy loam to gravelly loam with silt and limestone. Traces of the Supai, Verde, and Martin Limestone formations can also be found throughout the proposed AVA.
The petition states that the soils of the proposed AVA generally provide appropriate water drainage and have above-moderate levels of nutrients, although low calcium and magnesium levels are common. Additionally, the high bicarbonate levels in the groundwater of the proposed AVA have been found to increase soil pH and inhibit nutrient uptake in the vines. The petition states that these unfavorable vineyard conditions can be mitigated through rootstock, varietal, and clonal selections that can tolerate and even benefit from these nutrient deficiencies.
To the north and east of the proposed Verde Valley AVA, along the Mongollon Rim, the soils are described in the petition as “stony.” The most prominent soil series in these two regions are Brolliar stony loam and Siesta stony silt loam. According to the petition, the remainder of the soil to the north and east of the proposed AVA is comprised of approximately 22 other defined soil series, most of which have the terms “stony” or “very stony” in their names. To the west and southwest of the proposed AVA, in the Black Hills, the soils are also typically stony. Major soil series in these regions include Brolliar very stony clay loam, Soldier cobbly loam, Lonti-Wineg, and Lynx.
The proposed Verde Valley AVA is located within the basin of the Verde River. The petition describes the shape of this basin as a “bowl with a crack in it to the south where the river flows out of the valley.” The edges of the “bowl” gently slope down towards the valley
The proposed AVA is surrounded on all sides by higher elevations and steeper slopes. To the north and northeast of the proposed AVA, elevations rise up to 8,000 feet along the edge of the Mongollon Rim. To the west and southwest of the proposed AVA are the Black Mountains, which have steep slopes and elevations up to approximately 7,800 feet.
According to the petition, the proposed Verde Valley AVA's topography affects viticulture. Gentle slopes allow for easier vineyard management than steep slopes. Furthermore, because the proposed AVA is lower than the surrounding regions, cold air drains from the higher elevations into the proposed AVA during the spring and fall. As a result, the risk of frost damage increases in the proposed AVA, particularly in vineyards adjacent to the river. The petition states that vineyard owners attempt to mitigate the risk of frost by using inversion fans and protective sprays and by planting late-budding varietals of grapes.
The evidence provided in the petition indicates that the climate, soil, and topography of the proposed Verde Valley AVA distinguish it from the surrounding regions in each direction. The following table summarizes the features of the proposed AVA and the surrounding regions.
TTB concludes that the petition to establish the approximately 200-square mile Verde Valley AVA merits consideration and public comment, as invited in this proposed rule.
See the narrative description of the boundary of the petitioned-for AVA in the proposed regulatory text published at the end of this proposed rule.
The petitioner provided the required maps, and they are listed below in the proposed regulatory text. You may also view the proposed Verde Valley AVA boundary on the AVA Map Explorer on the TTB website, at
Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. For a wine to be labeled with an AVA name, at least 85 percent of the wine must be derived from grapes grown within the area represented by that name, and the wine must meet the other conditions listed in § 4.25(e)(3) of the TTB regulations (27 CFR 4.25(e)(3)). If the wine is not eligible for labeling with an AVA name and that name appears in the brand name, then the label is not in compliance and the bottler must change the brand name and obtain approval of a new label. Similarly, if the AVA name appears in another reference on the label in a misleading manner, the bottler would have to obtain approval of a new label. Different rules apply if a wine has a brand name containing an AVA name that was used as a brand name on a label approved before July 7, 1986. See § 4.39(i)(2) of the TTB regulations (27 CFR 4.39(i)(2)) for details.
If TTB establishes this proposed AVA, its name, “Verde Valley,” will be recognized as a name of viticultural significance under § 4.39(i)(3) of the TTB regulations (27 CFR 4.39(i)(3)). The text of the proposed regulation clarifies this point. Consequently, if this proposed rule is adopted as a final rule, wine bottlers using the name “Verde Valley” in a brand name, including a trademark, or in another label reference as to the origin of the wine, would have to ensure that the product is eligible to use the AVA name as an appellation of origin.
TTB invites comments from interested members of the public on whether it should establish the proposed AVA. TTB is also interested in receiving comments on the sufficiency and accuracy of the name, boundary, soils, climate, and other required information submitted in support of the petition. Please provide any available specific information in support of your comments.
Because of the potential impact of the establishment of the proposed Verde Valley AVA on wine labels that include the term “Verde Valley,” as discussed above under Impact on Current Wine Labels, TTB is particularly interested in comments regarding whether there will be a conflict between the proposed area name and currently used brand names. If a commenter believes that a conflict will arise, the comment should describe the nature of that conflict, including any anticipated negative economic impact that approval of the proposed AVA will have on an existing viticultural enterprise. TTB is also interested in receiving suggestions for ways to avoid conflicts, for example, by adopting a modified or different name for the AVA.
You may submit comments on this proposed rule by using one of the following three methods (please note that TTB has a new address for comments submitted by U.S. Mail):
•
•
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Please submit your comments by the closing date shown above in this proposed rule. Your comments must reference Notice No. 187 and include your name and mailing address. Your comments also must be made in English, be legible, and be written in language acceptable for public disclosure. TTB does not acknowledge receipt of comments, and TTB considers all comments as originals.
In your comment, please clearly indicate if you are commenting on your own behalf or on behalf of an association, business, or other entity. If you are commenting on behalf of an entity, your comment must include the entity's name, as well as your name and position title. If you comment via
You may also write to the Administrator before the comment closing date to ask for a public hearing. The Administrator reserves the right to determine whether to hold a public hearing.
All submitted comments and attachments are part of the public record and subject to disclosure. Do not enclose any material in your comments that you consider to be confidential or inappropriate for public disclosure.
TTB will post, and you may view, copies of this proposed rule, selected supporting materials, and any online or mailed comments received about this proposal within Docket No. TTB-2020-0002 on the Federal e-rulemaking portal,
All posted comments will display the commenter's name, organization (if any), city, and State, and, in the case of mailed comments, all address information, including email addresses. TTB may omit voluminous attachments or material that the Bureau considers unsuitable for posting.
You may also view copies of this proposed rule, all related petitions, maps and other supporting materials, and any electronic or mailed comments that TTB receives about this proposal by appointment at the TTB Information Resource Center, 1310 G Street NW, Suite 400, Washington, DC 20005. You may also obtain copies at 20 cents per 8.5- x 11-inch page. Please note that TTB is unable to provide copies of USGS maps or any similarly-sized documents that may be included as part of the AVA petition. Contact TTB's Regulations and Rulings Division at the above address, by email using the web form at
TTB certifies that this proposed regulation, if adopted, would not have a significant economic impact on a substantial number of small entities. The proposed regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of an AVA name would be the result of a proprietor's efforts and consumer acceptance of wines from that area. Therefore, no regulatory flexibility analysis is required.
It has been determined that this proposed rule is not a significant regulatory action as defined by Executive Order 12866 of September 30, 1993. Therefore, no regulatory assessment is required.
Karen A. Thornton of the Regulations and Rulings Division drafted this proposed rule.
Wine.
For the reasons discussed in the preamble, TTB proposes to amend title 27, chapter I, part 9, Code of Federal Regulations, as follows:
27 U.S.C. 205.
(a)
(b)
(1) Camp Verde, Ariz., 1969;
(2) Clarkdale, Ariz., 1973;
(3) Cornville, Ariz., 1968;
(4) Cottonwood, Ariz., 1973;
(5) Lake Montezuma, Ariz., 1969;
(6) Middle Verde, Ariz., 1969;
(7) Munds Draw, Ariz., 1973;
(8) Page Springs, Ariz., 1969; and
(9) Sedona, Ariz., 1969.
(c)
(1) The beginning point of the boundary is at the intersection of the 3,800-foot elevation contour and the northern boundary of Section 32, T17N/R3E, on the Clarkdale Quadrangle. From the beginning point, proceed east along the northern boundary of Section 32 until its intersection with the Verde River; then
(2) Proceed north along the Verde River to its intersection with the western boundary of Section 21, T17N/R3E; then
(3) Proceed north along the western boundaries of Sections 21 and 16 to the intersection with the 3,800-foot elevation contour; then
(4) Proceed southerly then easterly along the 3,800-foot elevation contour, crossing onto the Page Springs Quadrangle, to its intersection with Bill Gray Road in Section 18, T16N/R4E; then
(5) Proceed north along Bill Gray Road to its intersection with an unnamed, unimproved road known locally as Forest 761B Road in Section 32, T17N/R4E; then
(6) Proceed east, then northeast, along Forest 761B Road to its intersection with Red Canyon Road in Section 26, T17N/R4E; then
(7) Proceed south along Red Canyon Road to its intersection with U.S. Highway 89 Alt. in Section 35, T17N/R4E; then
(8) Proceed east over U.S. Highway 89 Alt. in a straight line to and unnamed, unimproved road known locally as Angel Valley Road, and proceed southeasterly along Angel Valley Road as it becomes a light-duty road, crossing over Oak Creek, and continuing along the southernmost segment of Angel Valley Road to its terminus at a structure on Deer Pass Ranch in Section 12, T16N/R4E; then
(9) Proceed south in a straight line to the 3,800-foot elevation contour in Section 12, T16/NR4E; then
(10) Proceed south-southeasterly along the 3,800-foot elevation contour, crossing over the southwestern corner of the Sedona Quadrangle and onto the Lake Montezuma Quadrangle, to the intersection of the contour line with an unnamed creek in Section 6, T15N/R5E; then
(11) Proceed southwesterly along the unnamed creek until its intersection with the 3,600-foot elevation contour in Section 1, T15N/R4E; then
(12) Proceed southerly along the 3,600-foor elevation contour, crossing briefly onto the Cornville Quadrangle and then back onto the Lake Montezuma Quadrangle, to the intersection of the elevation contour with an unnamed secondary highway known locally as Cornville Road in Section 7, T15N/R5E; then
(13) Proceed southeast along Cornville Road to its intersection with the 3,600-foot elevation contour in Section 20, T15N/R5 E; then
(14) Proceed easterly, then southerly, along the elevation contour to its intersection with the boundary of the Montezuma Castle National Monument in Section 36, T15N/R5E; then
(15) Proceed west, southeast, southwest, and then east along the boundary of the Montezuma Castle National Monument to its intersection with range line separating R5E and R6E; then
(16) Proceed south along the R5E/R6E range line, crossing onto the Camp Verde Quadrangle, to the intersection of the range line and the southeastern corner of Section 12, T14N/R5E; then
(17) Proceed west along the southern boundaries of Sections 12, 11, 10, and 9 to the intersection of the southern boundary of Section 9 and the Montezuma Castle National Monument; then
(18) Proceed along the boundary of the Montezuma Castle National Monument in a counterclockwise direction to the intersection of the monument boundary and the 3,300-foot elevation contour in Section 16, T14N/R5E; then
(19) Proceed southerly, then southeasterly, along the 3,300-foot elevation contour to its intersection with the eastern boundary of Section 18, T13N/R6E; then
(20) Proceed south along the eastern boundary of Section 18 to its intersection with the southern boundary of Section 18; then
(21) Proceed west along the southern boundaries of Sections 19, 13, 14, 15, 16, 17, and 18, T13N/R53, and Section 13, T13N/R4E, to the intersection with the 3,800-foot elevation contour in Section 13, T13N/R4E; then
(22) Proceed northwesterly along the 3,800-foot elevation contour, crossing over the Middle Verde and Cornville Quadrangles and onto the Cottonwood Quadrangle, to the intersection of the elevation contour with an unnamed creek in Del Monte Gulch in Section 5, T15N/R3E; then
(23) Proceed westerly along the unnamed creek to its intersection with the 5,000-foot elevation contour in Section 26, T16N/R2E; then
(24) Proceed northerly along the 5,000-foot elevation contour, crossing over the Clarkdale Quadrangle and onto the Munds Draw Quadrangle, to the intersection of the elevation contour with a pipeline in Section 4, T16N/R2E; then
(25) Proceed southeasterly along the pipeline, crossing onto the Clarkdale Quadrangle, and continuing northeasterly along the pipeline to its intersection with the 3,800-foot elevation contour in Section 32, T17N/R3E; then
(26) Proceed northerly along the 3,800-foot contour, returning to the beginning point.
Coast Guard, DHS.
Notice of proposed rulemaking.
The Coast Guard is proposing to establish a temporary special local regulation in the navigable waters of San Francisco Bay in San Francisco, CA in support of the San Francisco Sail
Comments and related material must be received by the Coast Guard on or before March 30, 2020.
You may submit comments identified by docket number USCG-2020-0078 using the Federal eRulemaking Portal at
If you have questions about this proposed rulemaking, call or email Lieutenant Jennae Cotton, Waterways Management, U.S. Coast Guard; telephone 415-399-3585, email
On June 3, 2019, F50 League, LLC notified the Coast Guard of an intention to conduct the “Sail Grand Prix 2020” event in the San Francisco Bay. F50 League, LLC is a sailing league featuring world-class sailors racing 50-foot foiling catamarans. The season starts in February 2020. The event will be held in six iconic cities throughout the world, traveling to the San Francisco Bay in May 2020. In San Francisco, they propose to take advantage of the natural amphitheater that the central bay and city waterfront provide.
F50 League, LLC has applied for a Marine Event Permit to hold the Sail Grand Prix 2020 race event on the waters of the San Francisco Bay in San Francisco, California. The Coast Guard has not approved the Marine Event Permit and is still evaluating the application. If the permit is approved, however, we anticipate that a special local regulation may be necessary to ensure public safety during the practice and race periods. To provide adequate time for public input, we are proposing this special local regulation prior to a decision on the Marine Event Permit.
Prior to drafting this notice of proposed rulemaking, the Coast Guard solicited input from maritime stakeholders to better understand the nature of commercial and recreational activities on the Bay and how the proposed Sail Grand Prix 2020 race event could impact such activities. The Coast Guard participated in both a navigation work group and monthly public meeting of the local Harbor Safety Committee (HSC) to meet with stakeholders to obtain information and gather feedback on notional approaches to enacting regulation in connection with the Sail Grand Prix 2020 race event. Additionally, the Coast Guard has taken feedback from the Sail Grand Prix 2019 race event into consideration for the plans associated with the Sail Grand Prix 2020 race event.
These regulations are needed to keep persons and vessels away from the sailing race vessels, which exhibit unpredictable maneuverability and have a demonstrated likelihood during the simulation of racing scenarios for capsizing. The special local regulation will help prevent injuries and property damage that may be caused upon impact by these fast-moving vessels. The provisions of this temporary special local regulation will not exempt racing vessels from any federal, state, or local laws or regulations, including Nautical Rules of the Road. The Coast Guard proposes this rulemaking under authority in 46 U.S.C. 70034 (previously 33 U.S.C. 1231).
Under 33 CFR 100.35, the Coast Guard District Commander has authority to promulgate certain special local regulations deemed necessary to ensure the safety of life on the navigable waters immediately before, during, and immediately after an approved regatta. Pursuant to 33 CFR 1.05-1(i), the Commander of Coast Guard District 11 has delegated to the COTP the responsibility of issuing such regulations.
The COTP proposes to establish a special local regulation associated with the Sail Grand Prix 2020 race event from 11:30 a.m. to 5:30 p.m. on each of April 30, 2020, May 1, 2020, May 2, 2020, and May 3, 2020. The areas regulated by this special local regulation will be east of the Golden Gate Bridge, south of Alcatraz Island, west of Treasure Island, and in the vicinity of the city of San Francisco waterfront. The Coast Guard proposes to establish an official practice race area, an official race area, a spectator area, and a no-loitering area. Images of the four zones and enforcement dates and times of these proposed regulated areas may be found in the docket.
The proposed special local regulation would encompass all navigable waters of the San Francisco Bay, from surface to bottom, within the area formed by connecting the following latitude and longitude points in the following order: 37°48′18″ N, 122°27′44″ W; thence to 37°48′30″ N, 122°27′56″ W; thence to 37°49′18″ N, 122°27′59″ W; thence to 37°49′34″ N, 122°25′36″ W; thence to 37°49′10″ N, 122°25′10″ W; thence to 37°48′45″ N, 122°25′10″ W; thence to 37°48′42″ N, 122°25′13″ W and thence along the shore to the point of beginning. Located within this footprint, there would be four separate regulated areas: Zone “A”, the Official Practice Box Area; Zone “B”, the Official Race Box Area; Zone “C”, the Spectator Area; and Zone “D”, the No Spectating or Loitering Area.
Zone “A”, the Official Practice Box Area, would encompass all navigable waters of the San Francisco Bay, from surface to bottom, within the area formed by connecting the following latitude and longitude points in the following order: 37°49′19″ N, 122°27′19″ W; thence to 37°49′28″ N, 122°25′52″ W; thence to 37°48′49″ N, 122°25′45″ W; thence to 37°48′42″ N, 122°27′00″ W; thence to 37°48′51″ N, 122°27′14″ W and thence to the point of beginning. Only designated Sail Grand Prix 2020 race and support vessels would be permitted to enter Zone “A”. Zone “A” would be used by the race and support vessels during the official practice period on April 30th, 2020 and May 1st, 2020. Zone “A”, the Official Practice Box Area, will be enforced during the official practices from 11:30 a.m. to 5:30 p.m. on April 30, 2020 and May 1, 2020. Excluding the public from entering Zone “A” is necessary to provide protection from the operation of the high-speed sailing vessels within this area.
Zone “B”, the Official Race Box Area, would be marked by 12 or more colored visual markers. The position of these markers would be confirmed via Broadcast Notice to Mariners at least three days prior to the event. Only designated Sail Grand Prix 2020 race, support, and VIP vessels would be
Zone “C”, the Spectator Area, will include specified parts of the waters immediately adjacent to racing Zone “B” and will be defined by latitude and longitude points as per Broadcast Notice to Mariners. Zone “C” will be further divided into three additional sub-areas: Zone “C1 East”, Zone “C1 West”, and Zone “C2”. Zone “C1 East” and Zone “C1 West” would be the general spectator zones that are open to all vessel spectators. Zone “C2” will be a separate designated spectator area or areas marked by approximately four or more colored visual markers that will be managed by marine event sponsor officials. The designation of Zone “C”, to include Zone “C1 East”, Zone “C1 West”, and Zone “C2”, will allow spectators to observe the Sail Grand Prix 2020 race event in a regulated area at a safe distance from the sailing regatta occurring in Zone “B”.
Zone “D” will be the No Spectating or Loitering Area. This zone will allow vessels to transit in and out of marinas, piers, and vessel launching locations along the San Francisco waterfront throughout the duration of the Sail Grand Prix event. Additionally, this zone keeps vessel traffic moving along the northern boundary of the regulated area, reducing any impact of recreational vessels on commercial shipping traffic. All vessels shall maintain headway and shall not loiter or anchor within the confines of Zone “D”. Mariners can transit Zone “D” during the Sail Grand Prix, decreasing the impact to the San Francisco waterfront and vessel traffic lanes. All mariners must obey the direction of the COTP or the COTP's designated representative while transiting Zone “D”.
Zones “B”, “C”, and “D” will be enforced at all times during the races, from 11:30 a.m. to 5:30 p.m. on May 2, 2020 and May 3, 2020.
The duration of the establishment of the proposed special local regulation is intended to ensure the safety of vessels in these navigable waters before, during, and after the scheduled practice and race periods. This proposed temporary special local regulation will temporarily restrict vessel traffic adjacent to the city of San Francisco waterfront in the vicinity of the Golden Gate Bridge and Alcatraz Island and prohibit vessels and persons not participating in the race event from entering the established race area. The regulatory text we are proposing appears at the end of this document.
We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This NPRM has not been designated a “significant regulatory action” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.
This regulatory action determination is based on the size, location, and duration of the special local regulation. With this special local regulation, the Coast Guard intends to maintain commercial access to the ports through an alternate vessel traffic management scheme. The special local regulation is limited in duration, and is limited to a narrowly tailored geographic area with designated and adequate space for transiting vessels to pass when permitted by the COTP or a designated representative. In addition, although this rule restricts access to the waters encompassed by the special local regulation, the effect of this rule will not be significant because the local waterway users will be notified in advance via public Notice to Mariners to ensure the special local regulation will result in minimum impact. Therefore mariners will be able to plan ahead and transit outside of the periods of enforcement of the special local regulation, and if they choose not to do so, they will be able to transit around the northern side of the special local regulation. The entities most likely to be affected are commercial vessels and pleasure craft engaged in recreational activities.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule will not have a significant economic impact on a substantial number of small entities.
This rule may affect owners and operators of commercial vessels and pleasure craft engaged in recreational activities and sightseeing. This special location regulation will not have a significant economic impact on a substantial number of small entities for the reasons stated in section IV.A. above. This special local regulation will be subject to enforcement for a limited duration. When the special local regulation is in effect, vessel traffic can pass safely around the regulated area. The maritime public will be advised in advance of this special local regulation via Notice to Mariners.
If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule will have a significant economic impact on it, please submit a comment (see
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the rule will affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please call or email the person listed in the
This proposed rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132 (Federalism), if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various
Also, this proposed rule does not have tribal implications under Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments) because it will not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please call or email the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this proposed rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves a special local regulation that will create a regulated area, divided into four zones, of limited size and duration that includes areas for vessel traffic to pass. Normally such actions are categorically excluded from further review under paragraph L61 of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 01. A preliminary Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating this docket, see the
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments received will be posted without change to
Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at
Marine safety, Navigation (water), Reporting and recordkeeping requirements, Waterways.
For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 100 as follows:
46 U.S.C. 70041; 33 CFR 1.05-1.
(a)
(b)
(i) “Designated representative” means a Coast Guard Patrol Commander or “PATCOM”, including a Coast Guard coxswain, petty officer, or other officer on a Coast Guard vessel or a Federal, State, or local officer designated by or assisting the Captain of the Port San Francisco (COTP) in the enforcement of the special local regulation.
(ii) Zone “A” means the Official Practice Box Area. This zone will encompass all navigable waters of the San Francisco Bay, from surface to bottom, within the area formed by connecting the following latitude and longitude points in the following order: 37°49′19″ N, 122°27′19″ W; thence to 37°49′28″ N, 122°25′52″ W; thence to 37°48′49″ N, 122°25′45″ W; thence to 37°48′42″ N, 122°27′00″ W; thence to 37°48′51″ N, 122°27′14″ W and thence to the point of beginning.
(iii) Zone “B” means the Official Race Box Area, which will be marked by 12 or more colored visual markers within the special regulation area designated in paragraph (a). The position of these markers will be specified via Broadcast Notice to Mariners at least three days prior to the event.
(iv) Zone “C” means the Spectator Area, which is within the special local regulation area designated in paragraph (a) and outside of Zone “B”, the Official Race Box Area. Zone “C” will be defined by latitude and longitude points per Broadcast Notice to Mariners. Zone “C” will be further divided into three additional sub-areas: Zone “C1 East”, Zone “C1 West”, and Zone “C2”. Zone “C1 East” and Zone “C1 West” will be the general spectator areas that are open to all vessel spectators. Zone “C2”
(v) Zone “D” means the No Spectating or Loitering Area. This zone will allow vessels to transit in and out of marinas, piers, and vessel launch areas throughout the duration of the Sail Grand Prix. All vessels shall maintain headway and shall not loiter or anchor within the confines of Zone “D”. Mariners can transit Zone “D” during the Sail Grand Prix 2020 event, decreasing the impact of the special local regulation to the San Francisco waterfront.
(c)
(i) Only support and race vessels will be authorized by the COTP or designated representative to enter Zone “A” during the official practice days. Only support and race vessels will be authorized by the COTP or designated representative to enter Zone “B” during the race event. Vessel operators desiring to enter or operate within Zone “B” must contact the COTP or a designated representative to obtain permission to do so. Persons and vessels may request permission to transit Zone “B” on VHF-23A.
(ii) Spectator vessels in Zone “C” must maneuver as directed by the COTP or designated representative. When hailed or signaled by the COTP or designated representative by a succession of sharp, short signals by whistle or horn, the hailed vessel must come to an immediate stop and comply with the lawful directions issued. Failure to comply with a lawful direction may result in additional operating restrictions, citation for failure to comply, or both.
(iii) Spectator vessels in Zone “C” must operate at safe speeds which will create minimal wake.
(iv) Vessels in Zone “D” shall maintain headway and shall not loiter or anchor within the confines of Zone “D”. Vessels in Zone “D” must maneuver as directed by the COTP or designated representative.
(v) Rafting and anchoring of vessels are prohibited within Zones “A”, “B”, “C”, and “D”.
(d)
Coast Guard, DHS.
Notice of proposed rulemaking.
The Coast Guard is proposing to establish a temporary safety zone for certain navigable waters of the New Jersey Intracoastal Waterway. The safety zone is needed to protect participants of the Stockton University-AC Double Duel Regatta on these navigable waters near Atlantic City, NJ, during the rowing competition on April 4, 2020, and April 5, 2020. This proposed rulemaking would prohibit non-participant persons and vessels from entering, transiting through, anchoring in, or remaining within the safety zone unless authorized by the Captain of the Port (COTP) Delaware Bay or a designated representative. We invite your comments on the proposed rulemaking.
Comments and related material must be received by the Coast Guard on or before March 16, 2020.
You may submit comments identified by docket number USCG-2020-0088 using the Federal eRulemaking Portal at
If you have questions about this proposed rulemaking, call or email Petty Officer Thomas Welker, U.S. Coast Guard Sector Delaware Bay, Waterways Management Division; telephone 215-271-4814, email
The Stockton University Athletic Department notified the Coast Guard that it will be conducting a rowing competition from noon to 6:30 p.m. on April 4, 2020, and from 7:30 a.m. to 1:30 p.m. on April 5, 2020. The competition will consist of rowing teams in 40′ to 60′ racing shells on a 2000-meter course in the New Jersey Intracoastal Waterways of Atlantic City, New Jersey. The Captain of the Port Delaware Bay (COTP) has determined that potential hazards associated with this rowing event will be a safety concern for participants and for vessels operating within the specified waters of the New Jersey Intracoastal Waterway.
The purpose of this rulemaking is to protect participants, spectators, and transiting vessels on waters near the regatta on the New Jersey Intracoastal Waterway before, during, and after the scheduled event. The Coast Guard is proposing this rulemaking under authority 46 U.S.C. 70034 (previously 33 U.S.C. 1231).
The Coast Guard is proposing to establish a temporary safety zone from noon on April 4, 2020, until 2 p.m. on April 5, 2020. The zone would be enforced from noon to 7 p.m. on April 4, 2020, and from 7 a.m. to 2 p.m. on April 5, 2020. The safety zone would cover all navigable waters of the New Jersey Intracoastal Waterway within the polygon bounded by the following: Originating on the southwest portion at approximate position latitude 39°20′57″ N, longitude 074°27′59″ W; thence northeasterly along the shoreline to latitude 39°21′35″ N, longitude 074°27′06″ W; thence east across the mouth of Beach Thorofare to the shoreline at latitude 39°21′41″ N, longitude 074°26′55″ W; thence east along the shoreline to latitude 39°21′42″N, longitude 074°26′51″ W; thence southeast across the New Jersey Intracoastal Waterway to the shoreline at latitude 39°21′43″ N, longitude 074°26′41″ W; thence southwest along the shoreline to approximate position latitude 39°20′55″ N, longitude 074°27′57″ W; thence north to the point of origin. The duration of the zone is
We developed this proposed rule after considering numerous statutes and Executive orders related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13771 directs agencies to control regulatory costs through a budgeting process. This NPRM has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, the NPRM has not been reviewed by the Office of Management and Budget (OMB), and pursuant to OMB guidance it is exempt from the requirements of Executive Order 13771.
The impact of this proposed rule is not significant for the following reasons: (1) The enforcement periods will last seven hours each day of the 2-day event at a time of year when vessel traffic is usually low; (2) although non-participant persons and vessels may not enter, transit through, anchor in, or remain with the safety zone without authorization from the COTP Delaware Bay or a designated representative, surrounding channels within the New Jersey Intracoastal Waterways will remain unaffected. Persons and vessels will be able to operate in the surrounding area during the enforcement period; (3) persons and vessels will still be able to enter, transit through, anchor in, or remain within the regulated area if authorized by the COTP Delaware Bay or a designated representative; and (4) the Coast Guard will provide advance notification of the safety zone to the local maritime community by Local Notice to Mariners, Broadcast Notice to Mariners, and on-scene actual notice from designated representatives.
The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule will not have a significant economic impact on a substantial number of small entities.
While some owners or operators of vessels intending to transit the safety zone may be small entities, for the reasons stated in section V.A above, this proposed rule would not have a significant economic impact on any vessel owner or operator.
If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see
Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the
This proposed rule would not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).
A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this proposed rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.
Also, this proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this proposed rule has implications for federalism or Indian tribes, please contact the person listed in the
The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.
We have analyzed this proposed rule under Department of Homeland Security Directive 023-01, Rev. 1, associated implementing instructions, and Environmental Planning COMDTINST 5090.1 (series), which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves a safety zone lasting seven hours per day for two days that would prohibit entry within certain navigable waters during a rowing event. Normally such actions are categorically excluded from further review under paragraph L60(a) of Appendix A, Table 1 of DHS Instruction Manual 023-01-001-01, Rev. 1. A preliminary Record of Environmental Consideration supporting this determination is available in the docket. For instructions on locating the docket, see the
The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the
We view public participation as essential to effective rulemaking, and will consider all comments and material received during the comment period. Your comment can help shape the outcome of this rulemaking. If you submit a comment, please include the docket number for this rulemaking, indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation.
We encourage you to submit comments through the Federal eRulemaking Portal at
We accept anonymous comments. All comments received will be posted without change to
Documents mentioned in this NPRM as being available in the docket, and all public comments, will be in our online docket at
Harbors, Marine safety, Navigation (water), Reporting and recordkeeping requirements, Security measures, Waterways.
For the reasons discussed in the preamble, the Coast Guard is proposing to amend 33 CFR part 165 as follows:
46 U.S.C. 70034, 70051; 33 CFR 1.05-1, 6.04-1, 6.04-6, and 160.5; Department of Homeland Security Delegation No. 0170.1.
(a)
(b)
(c)
(2) To seek permission to enter or remain in the zone, contact the COTP or the COTP's representative via VHF-FM channel 16 or 215-271-4807. Those in the safety zone must comply with all lawful orders or directions given to them by the COTP or the COTP's designated representative.
(3) This section applies to all vessels except those engaged in law enforcement, aids to navigation servicing, and emergency response operations.
(d)
(e)
Department of Veterans Affairs.
Proposed rule.
The Department of Veterans Affairs (VA) proposes to amend its regulations that contain the requirements for certification of attendance at on-the-job training and apprenticeship programs under the Veterans Apprenticeship and Labor Opportunity Reform Act (VALOR Act). Section 3 of this law eliminated the requirement that trainees (veterans and other eligible persons who receive the training) certify attendance at on-the-job or apprentice training prior to disbursement of a training assistance allowance, thereby placing the responsibility solely on the employer to certify attendance in on-the-job and apprenticeship programs. Although it does not apply to chapter 30, we propose to eliminate the regulatory trainee certification requirement for chapter-30 trainees as well.
Comments must be received on or before April 28, 2020.
Written comments may be submitted through
Cheryl Amitay, Chief, Policy and Regulation Development Staff (225C), Education Service, Department of Veterans Affairs, 810 Vermont Ave. NW, Washington, DC 20420, (202) 461-9700. (This is not a toll-free telephone number.)
Prior to the enactment of Public Law 115-89, 131 Stat. 1279, “Veterans Apprenticeship and Labor Opportunity Reform Act” (VALOR Act), 38 U.S.C. 3680(c) required that veterans and other eligible persons pursuing approved programs of on-the-job training (OJT) or apprenticeship training (trainees) certify actual attendance and that training establishments certify that a trainee was enrolled in and pursuing a program of apprenticeship or other on-job training. VA implemented former section 3680(c) in 38 CFR 21.4138(e)(2), 21.5133(b), and 21.7640(a)(3). VA also required dual certification for chapter-30 apprenticeship and OJT programs in 38 CFR 21.7140(c)(2).
Section 3 of Public Law 115-89 amended sec. 3680(c) to eliminate the trainee's attendance certification requirement. Consequently, only the training establishment is required to certify the trainee's OJT or apprenticeship training. Congress eliminated the trainee certification requirement to “reduce the administrative burden on veterans while maintaining attendance certification” to “ensure GI Bill benefits are only paid to individuals who are abiding by the benefit requirements.” H.R. Rep. No. 115-398, at 4 (2017). VA therefore proposes to amend 38 CFR 21.4138(e)(2), 21.5133(b), and 21.7640(a)(3) by removing references to the requirement for a trainee's certification.
Section 3034 of title 38, U.S.C., sets forth general provisions regarding the administration of the chapter 30 Montgomery GI Bill program. Section 3034(a)(1) provides that the general administration of educational benefits provisions contained in chapter 36 apply to the chapter 30 program, except for sec. 3680(c), among other provisions. Although 38 U.S.C. 3034(a)(1) specifically excepts 38 U.S.C. 3680(c) from application to the provision of educational assistance under chapter 30, VA previously promulgated 38 CFR 21.7140(c)(2)(ii) to require employer and trainee certification for apprenticeship and OJT programs under chapter 30. (VA apparently interpreted sec. 3034(a)(1) as not necessarily prohibiting VA from requiring dual certifications but, rather, as not requiring VA to require dual certifications pursuant to sec. 3680(c).)
VA proposes to amend 38 CFR 21.7140(c)(2)(ii) to eliminate the trainee certification requirement for apprenticeship and OJT programs under chapter 30. We are proposing to amend section 21.7140(c)(2) so that the certification requirement would be consistent across all VA education and training programs and with Congress' intent to reduce the administrative burden for trainees enrolled in apprenticeship and OJT programs. H.R. Rep. No. 115-398, at 4.
VA also proposes to amend the authority citations for 38 CFR 21.4138(e) and 21.5133 to explain that 38 U.S.C. 3680(c) is an authority for these regulations. Also, VA would add an authority citation for § 21.7140(c)(2) to explain that 38 U.S.C. 3034 and 3680(g) are the authority for this regulation. Finally, VA would add the Office of Management and Budget (OMB) information-collection control number for 38 CFR 21.4138, 21.5133, 21.7140, and 21.7640.
These proposed amendments would necessitate revision of the current OMB approved collection of information, OMB Control No. 2900-0178, VA Form 22-6553d-1, “Monthly Certification of On-The-Job and Apprenticeship Training.” Both the trainee and the training establishment must currently complete and sign the form reporting the number of hours the trainee has worked and, if applicable, the date the trainee terminated training. Based on this form, VA either continues a trainee's education benefits without changes or amends or terminates benefits. We propose to revise this information collection to remove the trainee's certification based on Public Law 115-89.
Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages; distributive impacts; and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. The Office of Information and Regulatory Affairs has determined that this rule is not a significant regulatory action under Executive Order 12866. VA's impact analysis can be found as a supporting document at
The Secretary hereby certifies that this proposed rule would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-612). This rulemaking does not change VA's policy or provisions involving any small entities. Therefore, pursuant to 5 U.S.C. 605(b), the initial and final regulatory flexibility analysis requirements of 5 U.S.C. 603 and 604 do not apply.
The Unfunded Mandates Reform Act of 1995 requires at 2 U.S.C. 1532 that agencies prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This proposed rule would have no such effect on State, local, and tribal governments, or on the private sector.
The Paperwork Reduction Act of 1995 (at 44 U.S.C. 3507) requires that VA consider the impact of paperwork and other information collection burdens imposed on the public. Under 44 U.S.C. 3507(a), an agency may not collect or sponsor the collection of information, nor may it impose an information collection requirement unless it displays a currently valid OMB control number.
This proposed rule includes provisions involving a revised collection of information under the Paperwork Reduction Act of 1995 that requires approval by OMB. OMB assigns control numbers to collections of information it approves. VA may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The information collection requirement in §§ 21.4138(e)(2), 21.5133(b), 21.7140(c)(2), and 21.7640(a)(3) is currently approved by OMB and has been assigned OMB control number 2900-0178.
The estimated annual burden for the revised collection of information would be determined as follows:
This proposed rule would reduce the current annual respondent burden costs from $283,348 to $142,211, resulting in an information collection burden costs savings of $141,137.
The Catalog of Federal Domestic Assistance numbers and titles for the programs affected by this document are 64.027, Post-9/11 Veterans Educational Assistance; 64.028, Post-9/11 Veterans Educational Assistance; 64.032, Montgomery GI Bill Selected Reserve; Reserve Educational Assistance Program; 64.117, Survivors and Dependents Educational Assistance; 64.120, Post-Vietnam Era Veterans' Educational Assistance; 64.124, All-Volunteer Force Educational Assistance.
Administrative practice and procedure, Armed forces, Civil rights, Claims, Colleges and universities, Conflict of interests, Defense Department, Education, Employment, Grant programs—education, Grant programs—veterans, Health care, Loan Programs—education, Loan programs—veterans, Manpower training programs, Reporting and recordkeeping requirements, Schools, Travel and transportation expenses, Veterans, Vocational education, Vocational rehabilitation.
The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Pamela Powers, Chief of Staff, Department of Veterans Affairs, approved this document on February 20, 2020, for publication.
For the reasons stated in the preamble, VA proposes to amend 38 CFR part 21 as follows:
10 U.S.C. 2141 note, ch. 1606; 38 U.S.C. 501(a), chs. 30, 32, 33, 34, 35, 36, and as noted in specific sections.
The revisions read as follows:
(e) * * *
(2) * * *
(ii) VA has received from the training establishment a certification of hours worked.
38 U.S.C. 501(a), chs. 32, 36, and as noted in specific sections.
The revisions read as follows:
(b) * * *
(2) VA has received from the training establishment a certification of hours
38 U.S.C. 501(a), chs. 30, 36, and as noted in specific sections.
The revisions and addition read as follows:
(c) * * *
(2) * * *
(ii) VA has received from the training establishment a certification of hours worked.
10 U.S.C. ch. 1606; 38 U.S.C. 501(a), 512, ch. 36, and as noted in specific sections.
The revisions read as follows:
(a) * * *
(3) * * *
(ii) VA has received certification by the training establishment of the reservist's hours worked.
Environmental Protection Agency (EPA).
Proposed rule.
EPA published the National Pollutant Discharge Elimination System (NPDES) Electronic Reporting Rule (“NPDES eRule”) on 22 October 2015. The 2015 rule required EPA and states to modernize Clean Water Act (CWA) reporting. The NPDES eRule included a phased implementation schedule. In this notice, EPA proposes postponing the compliance deadlines for Phase 2 implementation by three years and providing states with additional flexibility to request additional time as needed. Further, this notice proposes changes to the NPDES eRule that would clarify existing requirements and eliminate some duplicative or outdated reporting requirements. Taken together, these changes are designed to save the NPDES authorized programs considerable resources, make reporting easier for NPDES-regulated entities, streamline permit renewals, ensure full exchange of NPDES program data between states and EPA, enhance public transparency, improve environmental decision-making, and protect human health and the environment.
Comments must be received on or before April 28, 2020. Under the Paperwork Reduction Act (PRA), comments on the information collection provisions are best assured of consideration if the Office of Management and Budget (OMB) receives a copy of your comments on or before March 30, 2020.
Submit your comments, identified by Docket ID No. EPA-HQ-OECA-2019-0408, to the Federal eRulemaking Portal:
For additional information, please contact Mr. Carey A. Johnston, Office of Compliance (mail code 2222A), Environmental Protection Agency, 1200 Pennsylvania Avenue NW, Washington, DC 20460; telephone number: 202-566-1014; or email:
Entities potentially affected by this action include all NPDES-permitted facilities, whether covered by an individual permit or general permit, industrial users located in cities without approved local pretreatment programs, facilities subject to EPA's biosolids regulations, and governmental entities that have received NPDES program authorization or are implementing portions of the NPDES program in a cooperative agreement with EPA. These entities include:
This table is not intended to be an exhaustive list, but rather provides some examples of the types of entities potentially regulated by this action. Other types of entities not listed in this table may also be regulated. If you have questions regarding the applicability of this proposed action to a particular entity, consult the person listed in the
EPA published the National Pollutant Discharge Elimination System (NPDES) Electronic Reporting Rule (“NPDES eRule”) on 22 October 2015. The 2015 rule required EPA and states to modernize Clean Water Act (CWA) reporting for municipalities, industries and other facilities. The rule divided implementation into two “Phases.” The deadline for Phase 1 implementation passed on December 21, 2016. The deadline for Phase 2 is currently December 21, 2020. Some state authorized NPDES programs have provided feedback to EPA on how to improve Phase 2 implementation of the NPDES eRule and, in particular, have recommended changes to the schedule for Phase 2 implementation to allow both EPA and states sufficient time to develop and implement the information technology solutions necessary for electronic reporting of the Phase 2 data (see DCN 0001 to 0009). This notice proposes a change to the compliance deadlines for Phase 2 implementation and other changes to the NPDES eRule to allow for a smoother transition from paper to electronic reporting for the NPDES program.
Pursuant to the Clean Water Act (CWA), 33 U.S.C. 1251
Harnessing information technology that is now a common part of daily life is an important step toward reaching the goals of the CWA. EPA is promulgating this rule under the authority of CWA section 304(i) that authorizes EPA to establish minimum procedural and other elements of state programs under section 402, including reporting requirements and procedures to make information available to the public. In addition, EPA is promulgating this rule under section 308 of the CWA. Section 308 of the CWA authorizes EPA to require access to information necessary to carry out the objectives of the Act, including sections 301, 305, 306, 307, 311, 402, 404, 405, and 504. Section 402 of the CWA establishes the NPDES permit program for the control of the discharge of pollutants into the nation's waters. EPA is promulgating this rule under CWA sections 402(b) and (c), which require each authorized state, tribe, or territory to ensure that permits meet certain substantive requirements, and provide EPA information from point sources, industrial users, and authorized programs in order to ensure proper oversight. Finally, EPA is promulgating this rule under the authority of section 501, which authorizes EPA to prescribe such regulations as are necessary to carry out provisions of the Act.
EPA identified only minimal incremental costs of this proposed rule as the overall impact of these proposed changes would be to allow states to more efficiently implement the NPDES eRule. EPA proposes postponing the compliance deadlines for Phase 2 implementation by three years and providing states with additional flexibility to request an extension if more time is necessary but with no extension allowed beyond December 21, 2026.
This rule also proposes changes to the NPDES eRule that would clarify existing requirements and eliminate some duplicative or outdated reporting requirements. For example, EPA proposes to eliminate three data elements from the minimum set of NPDES program data (Appendix A to 40 CFR part 127): Reportable Noncompliance Tracking, Reportable Noncompliance Tracking Start Date, and Applicable Categorical Standards. This will reduce the costs to authorized NPDES programs in collecting, managing, and sharing these data. EPA also anticipates that the clarifications contained in this proposed rule will
EPA published the NPDES eRule on 22 October 2015. The 2015 rule required EPA and states to modernize Clean Water Act (CWA) reporting for municipalities, industries and other facilities. That rule replaced most paper-based NPDES reporting requirements with electronic reporting. This rule converted the following paper reports to electronic: (1) Discharge Monitoring Reports (DMRs); (2) general permit reports (
The NPDES eRule requires EPA to calculate electronic reporting participation rates for each authorized NPDES program six months after the deadline for conversion from paper to electronic submissions and annually thereafter [see 40 CFR 127.26(j)]. The compliance deadlines for Phase 1 of the NPDES eRule were 21 December 2016 and they included NPDES Data Groups No. 3 (Discharge Monitoring Reports or “DMRs”) and No. 4 [Sewage Sludge/Biosolids Annual Program Reports, where EPA implements the biosolids program (40 CFR part 503)]. EPA's first three assessments have shown considerable progress in Phase 1 implementation (see DCN 0012—0014), although more work needs to be done to achieve the full benefits of Phase 1. Current tracking of Phase 1 implementation is available through the “NPDES eRule Readiness Dashboard.” See:
Electronic submission of all other reports and notices covered by the NPDES eRule are part of Phase 2 implementation. See Table 1 to 40 CFR 127.16. The online “NPDES eRule Phase 2 Implementation Dashboard” provides an inventory of all general permits and program reports covered by the NPDES eRule. See:
EPA and states are now focusing on implementing Phase 2 of the NPDES eRule and also continuing to work on completing Phase 1 reporting deadlines. EPA and states are now gathering information and deploying NPDES electronic reporting tools for Phase 2 reports. EPA and states are collaborating and sharing information through multiple workgroups. The EPA-state General Permit and Program Report Technical Workgroup focuses on the EPA Regional and state general permits and program reports that will use EPA's NPDES Electronic Reporting Tool (NeT) for Phase 2 data.
The EPA-state NPDES Noncompliance Report (NNCR) workgroup discusses how to identify, categorize, sort, and display violations on the NNCR. This workgroup is discussing how best to implement the new NNCR regulations in 40 CFR 123.45. EPA held three listening sessions with the EPA-state NNCR workgroup to discuss updated language in 40 CFR 123.45. States provided feedback on how to clarify the category I noncompliance criteria for enforcement order violations, permit effluent limit violations, and reporting violations. EPA incorporated comments and other minor clarifying text and formatting issues from these workgroup discussions in this proposed rule.
EPA received letters from authorized NPDES programs on how to improve Phase 2 implementation of the NPDES eRule which recommended changes to the schedule for Phase 2 implementation to allow both EPA and states sufficient time to develop and implement the information technology solutions necessary for electronic reporting of the Phase 2 data (see DCN 0001 to 0009). In response to the feedback from the states in the letters and oral communications, this notice proposes changes to the NPDES eRule to allow for a smoother transition from paper to electronic reporting for the NPDES program.
EPA collected these changes over the past few years as EPA and states began implementing the NPDES eRule. These suggested changes are intended to clarify and streamline NPDES eRule implementation. These changes also update the required minimum set of NPDES program data to include recent changes to the NPDES program. EPA recently updated the NPDES permit application regulations (40 CFR 122.21) and the related forms with the 2019 NPDES Applications and Program Updates final rule. See February 12, 2019; 84 FR 3324. Taken together, these data standardizations and the corresponding electronic reporting requirements are designed to save the NPDES authorized programs considerable resources, make reporting easier for NPDES-regulated entities, streamline permit renewals (as permit writers typically review previous noncompliance events during permit renewal), improve the accuracy and completeness of NPDES program data shared with EPA from authorized states, ensure transparency of NPDES program data to the public, improve environmental decision-making, and protect human health and the environment.
Finally, in a separate rulemaking, EPA has proposed to update the minimum set of NPDES program data (Appendix A to 40 CFR part 127) for the municipal separate storm sewer systems (MS4s) sector. See April 20, 2019; 84 FR 18200. These changes to the NPDES eRule will correct obsolete citations and current inconsistencies with the newly modified MS4 Phase II regulations. See December 8, 2016; 81 FR 89320. These updates would not change the burden associated with complying with the NPDES eRule but, rather, the changes would assist permitting authorities and MS4 permittees in implementing NPDES electronic reporting. Today's proposal does not address those previously-proposed changes to the MS4 data elements.
This notice proposes to postpone the compliance deadlines for Phase 2 implementation of the NPDES eRule from December 21, 2020, to December 21, 2023 (see Table 1 to 40 CFR 127.16). EPA has received feedback from authorized NPDES programs on how to improve Phase 2 implementation of the NPDES eRule. This state feedback, in particular, recommended changes to the schedule for Phase 2 implementation to allow both EPA and states sufficient time to develop and implement the information technology solutions necessary for electronic reporting of the Phase 2 data (see DCN 0001 to 0009). One letter submitted by the Association of Clean Water Agencies (“ACWA”) noted that, “the new deadline should take into consideration the resources and time EPA will need to invest in updating ICIS-NPDES, the resources and time EPA will need to invest to complete work on the NPDES Electronic Tool, known as “NeT,” and the resources and time states will then need
The reason for this proposal is to allow EPA additional time to complete the development of electronic tools that the States may use to comply with the electronic reporting requirements. EPA had intended for these tools to be available as an option for the states to use by December 2020, but EPA has experienced unexpected delays since EPA promulgated the 2015 NPDES Rule. These delays include the modernization of its pre-existing electronic reporting tool for the collection of DMRs (called “NetDMR”) and the switch from using a commercially license software platform to an open-source software platform for general permits and program reports (called “NPDES Electronic Report Tool” or “NeT”). The NetDMR changes involved migrating tens of thousands of NetDMR users to the Agency's Central Data Exchange (CDX) system for account management. This simplified NetDMR account management for EPA, states, and NetDMR users. EPA made the switch to open-source software platform for NeT to lower its costs. EPA estimates that these tools will be available by December 21, 2023 (see DCN 0017). EPA has gathered basic information on all general permits and program reports that will use NeT (see NPDES eRule Phase 2 Implementation Dashboard). EPA expects to build the necessary NeT applications in order to meet the new Phase 2 compliance deadlines as it has already deployed general permit electronic reporting tools for more than 27,000 facilities that are subject to federal or authorized state general permits (approximately 55% of the estimated number of facilities that will use NeT). An extension of the Phase 2 compliance deadlines will also assist states who have experienced similar challenges in developing the information technology infrastructure to implement electronic reporting tools for their general permit covered facilities.
The following are the proposed regulatory changes that EPA is considering for the Phase 2 compliance deadlines:
• Change the Phase 2 compliance deadlines in Table 1 to 40 CFR 127.16 from December 21, 2020, to December 21, 2023 for general permit reports and program reports.
• Change the Phase 2 compliance deadlines in the NPDES regulations in 40 CFR parts 122, 403, and 503. These provisions originated the reporting requirements.
EPA proposes to change the Phase 2 compliance (deadline) date for the following NPDES reporting requirements in 40 CFR parts 122, 403, and 503:
• Low Erosivity Waivers (LEW)—40 CFR 122.26(b)(15)(i)(C);
• No Exposure Certifications (NOE)—40 CFR 122.26(g)(1)(iii);
• Notice of Intent to discharge (NOI)—40 CFR 122.28(b)(2)(i);
• Small Municipal Separate Storm Sewer System (MS4) Program Report—40 CFR 122.34(d)(3);
• Sewer Overflow/Bypass Event Report—40 CFR 122.41(l)(6)(i), 122.41(l)(7), 122.41(m)(3)(i), and 122.41(m)(3)(ii);
• Medium or Large MS4 Program Report—40 CFR 122.42(c);
• CAFO Annual Report—40 CFR 122.42(e)(4);
• Notice of Terminations (NOT)—40 CFR 122.64(c);
• Significant Industrial User Compliance Reports in Municipalities Without Approved Pretreatment Programs—40 CFR 403.12(e) and (h);
• Pretreatment Program Report—40 CFR 403.12(i); and
• Biosolids Annual Report—40 CFR 503.18, 503.28, 503.48.
In addition to moving the compliance deadlines to December 21, 2023, EPA proposes to add a reference to the proposed alternative Phase 2 compliance deadlines provisions at 40 CFR 127.24(e) or (f). This is discussed in more detail below. Other than the changes to the deadlines for complying with Phase 2 compliance deadlines and the addition of the reference to the alternative Phase 2 compliance deadlines provisions, EPA is not proposing any changes to the requirements in these sections and will not respond to any public comments on issues other than the dates.
Finally, EPA regulations set the NNCR publication date at December 21, 2021. EPA originally picked this date as it needed time to develop this report and that it was one year after the Phase 2 compliance deadlines for electronic reporting. As previously noted, EPA and states have made significant progress in implementing Phase 1 and EPA has held frequent meetings with states on how to develop the NNCR.
EPA does not see the need to extend the NNCR publication compliance deadline for an additional three years, as it has some Phase 1 data that can be incorporated into the NNCR. EPA plans to incorporate Phase 2 data into the NNCR as these data become available. The benefit of this approach would be to give EPA, states, and the public a complete inventory of facilities with violations based on the most currently available set of NPDES program data. This will help EPA and states identify noncompliance issues that might impact human health or the environment.
However, EPA needs additional time to work with states on completing Phase 1 reporting and how best to categorize and display non-compliance in the NNCR based on Phase 1 data. In addition, EPA is already working with states on reducing the level of Significant Non-Compliance with NPDES requirements using the Phase 1 data as one of its National Compliance Initiatives for 2020-2023.
In addition to changing the Phase 2 compliance deadline, EPA is proposing new regulatory provisions to create additional flexibility for Phase 2 compliance deadlines in case they are needed. These new provisions respond to the requests from ACWA and other authorized NPDES programs for more time to develop and implement the information technology solutions necessary for electronic reporting of the Phase 2 data (see DCN 0001 to 0009).
The EPA proposes a new regulatory provision [40 CFR 127.24(e)] that would allow authorized NPDES programs to request additional time beyond December 21, 2023 to implement Phase 2 of the NPDES eRule. Under this provision, an authorized NPDES program would send a request for EPA to review and approval. This request would identify the facilities, general permits, program reports, or data elements for which the authorized NPDES program needs additional time beyond December 21, 2023. For example, under this option a state could seek approval from the EPA to postpone implementation of electronic reporting for a NPDES general permit until an agreed-upon time after December 21, 2023, but no later than December 21, 2026. This waiver might be helpful if a state has a permit or program report that is a lower priority for electronic reporting (
While states may make multiple requests for compliance deadline extensions beyond December 21, 2023, the proposed rule would not allow EPA to grant extensions beyond December 21, 2026. Each alternative Phase 2 compliance deadline request would need to:
• Be submitted to EPA by the Director, as defined in 40 CFR 122.2;
• Identify each general permit, program report, and related data elements covered by the request and the corresponding alternative compliance deadline(s);
• Identify each facility covered by the request and the corresponding alternative compliance deadline(s) (Note: This only applies if the request covers some but not all facilities covered by the relevant general permit or program report requirement);
• Be submitted at least 120 days prior to the then-applicable compliance deadline(s) in Table 1 to 40 CFR 127.16 or a previously EPA approved alternative compliance deadline; and
• Provide a rationale for the delay and enough details (
EPA would review each alternative Phase 2 compliance deadline request to determine if it provides enough detail to accurately assess if the state has a reasonable plan to deploy electronic reporting by the requested alternative Phase 2 compliance deadline. EPA would return alternative Phase 2 compliance deadline requests with insufficient detail back to the Director within 30 days of receipt and provide recommendations. EPA would approve or deny each complete alternative Phase 2 compliance deadline request within 120 days of receipt of a sufficiently detailed request. EPA would provide notice to the authorized NPDES program of EPA's approval or denial. The authorized NPDES program could re-apply if the initial request were denied by EPA.
Under the proposal, EPA could elect to deny an alternative Phase 2 compliance deadline request and then could continue to follow the procedure in the existing rule for determining the initial recipient of electronic NPDES information (see 40 CFR 127.27). EPA must become the initial recipient of electronic NPDES information from NPDES-regulated facilities if the state, tribe, or territory does not consistently maintain electronic data transfers in compliance with the NPDES eRule [see 40 CFR 127.27(d)(2)]. EPA would update its website with each alternative Phase 2 compliance deadline request and the corresponding Agency approval or denial notice. EPA would provide updated information at:
EPA is also proposing a separate regulatory provision [40 CFR 127.24(f)] that would authorize EPA to, on its own initiative, allow for additional time for one or more states to implement NPDES electronic reporting beyond December 21, 2023. Under this proposal, EPA could establish an alternative Phase 2 compliance deadline for electronic reporting and data sharing for one or more facilities, general permit reports, program reports, and related data elements (see Table 2 to Appendix A to 40 CFR part 127). Under the proposal, EPA could set an alternative Phase 2 compliance deadline for up to three years but not beyond December 21, 2026. EPA would update its website and online “NPDES eRule Phase 2 Implementation Dashboard” to clearly identify the alternative Phase 2 compliance deadlines for each facility, general permit report, program report, and related data elements by authorized NPDES program. Separately, EPA would provide notice to the one or more authorized NPDES program covered by each alternative Phase 2 compliance deadline through email or letters. This notice would include a rationale for the delay and enough details (
The following are proposed clarifying edits to the 2015 NPDES eRule. These changes are based on EPA and state experience over the past few years during NPDES eRule implementation. These proposed changes are intended to clarify and streamline NPDES eRule implementation. The last two changes also include two new data sharing requirements related to NAICS codes and variance requests that were recently added to the NPDES application forms. See the 2019 NPDES Applications and Program Updates Rule (February 12, 2019; 84 FR 3324).
EPA proposes to delete “by the Director” in the title for this section. EPA proposes this deletion as the NPDES eRule eliminated the previous noncompliance reports that were authored by state NPDES programs and replace them with one noncompliance report (
The NPDES eRule also eliminated state noncompliance reporting [
• Re-order the violation categories to better match the order EPA previously used in the pre-2015 version of 123.45 for the Category I noncompliance definitions;
• Correct the label and definition used for violations of administrative or judicial enforcement orders;
• Correct the label for permit effluent limit violations;
• Clarify the definition of Category I noncompliance for reporting violations; and
• Clarify the text in Appendix A to 40 CFR 123.45 and update the formatting to correctly show labels and groups of pollutants.
EPA solicited feedback from the EPA-state NNCR workgroup on these proposed changes. EPA received feedback from states that it would be helpful to re-order the noncompliance categories to better match the order EPA used prior to promulgating the 2015 NPDES eRule. States also provided feedback to EPA that several NNCR Category I definitions should be clarified and refined. States suggested
States also suggested deleting the word “complete” in the “Reporting violations” violation category. Some states indicated that this definition could be interpreted to mean that the submission of an incomplete report could trigger Category I noncompliance (
EPA is retaining in the NNCR the identification of Category I reporting violations for facilities that do not provide the required data for an entire DMR but instead report a noncompliant reason for not providing these data. An example of this kind of noncompliance is when a facility fails to conduct any sampling or analysis during the reporting period as required by its NPDES permit. The facility would use the DMR form to report this noncompliance to the authorized NPDES program. These noncompliant reasons at the DMR form level will continue to be classified as Category I noncompliance reporting violations.
States also requested more clarity on the type of reporting violations that would always trigger Category I noncompliance. EPA is proposing to retain the 30-day grace period and list the reports that must be filed within 30 days: (1) Final compliance schedule progress reports; (2) Discharge Monitoring Reports [see 40 CFR 122.41(l)(4)(i)], and (3) program reports [see 40 CFR 127.2(f)]. These reports are critical compliance monitoring information and closely align with NPDES eRule (see Table 1 to 40 CFR 127.16). EPA is also retaining violations of the twenty-four reporting and five-day reporting NPDES requirements [see 40 CFR 122.41(l)(6)] in the “Reporting violations” violation category as these reporting violations relate to “noncompliance which may endanger health or the environment.” States also provided feedback that they would like the ability to use their discretion to identify other reporting violations as Category I violations. EPA notes that the NNCR already includes this flexibility as the “Other violations” category includes, “any violation or group of violations, which in the discretion of the Director or EPA, are considered to be of concern.”
Finally, EPA proposes to clarify the text in Appendix A to 40 CFR 123.45 and update the formatting to correctly show labels and groups of pollutants. These proposed clarifications would fix an inaccurate reference and use the same wording from the “Violation classifications” section of the NNCR. EPA intends no substantive change to the scope of Category I noncompliance through these changes.
EPA proposes to delete the last sentence in the data description for the following four `deficiency' data elements in Appendix A to 40 CFR part 127: “The values for this data element will distinguish between noncompliance and significant noncompliance (SNC).”
• Deficiencies Identified Through the Biosolids/Sewage Sludge Compliance Monitoring
• Deficiencies Identified Through the MS4 Compliance Monitoring
• Deficiencies Identified Through the Pretreatment Compliance Monitoring
• Deficiencies Identified Through the Sewer Overflow/Bypass Compliance Monitoring
EPA is also proposing to delete the regulation citation to 40 CFR 123.45 for these four data elements.
EPA proposes to delete the last sentence in the data description for the four `deficiency' data elements as only violations affect compliance status. This change would make clear that these four `deficiency' data elements should not be used to affect compliance status. These separate data elements mirror the current inspection and violation identification practices of authorized NPDES programs. In general, EPA and state inspectors document their findings made during inspections and note any `deficiencies.' EPA created four different `deficiency' data elements to identify and track these instances of potential noncompliance. The inspector's manager will typically review these `deficiencies' and decide if any of them warrant separate identification as violations. These violations are already tracked with the “Violation Code” data element. Deleting this sentence from the descriptions for these four data elements will eliminate any potential confusion as to whether the identified deficiency automatically created an instance of non-compliance.
EPA proposes to rename the “Biosolids or Sewage Sludge—Land Application or Surface Disposal Deficiencies” data element to “Biosolids or Sewage Sludge—Violations” and update the related data description.
EPA mislabeled the “Biosolids or Sewage Sludge—Land Application or Surface Disposal Deficiencies” data element in the NPDES eRule. This element is part of the Federal biosolids annual report and allows NPDES-regulated entities to self-report violations on all regulated biosolids management practices (
EPA used an incorrect title in two sections of the NPDES eRule for the report that provides information on sewer overflows and bypass events. EPA used the incorrect title, “Sewer Overflow Event Reports [40 CFR 122.41(l)(6) and (7)],” at Table 1 to 40 CFR 127.16 and Table 1 to Appendix A, 40 CFR part 127. The correct title is, “Sewer Overflow/Bypass Event Reports [40 CFR 122.41(l)(4), (6), (7), and 122.41(m)(3)].” EPA used the correct title in all other references to this report. EPA is also proposing to make conforming changes to the “Program area” column and the “Minimum frequency” column in Table 1 (Appendix A 40 CFR part 127).
EPA proposes deleting the following two data elements as these data are no longer used for EPA's national NPDES program:
• Reportable Noncompliance Tracking; and
• Reportable Noncompliance Tracking Start Date.
EPA mistakenly included these two data elements in Appendix A. These two data elements are no longer needed to address unforeseen circumstances when the authorized NPDES program needs to turn off automatic violation detection by EPA's NPDES data system. The current recommended approach to turn off compliance tracking in EPA's NPDES data system is for EPA or authorized NPDES programs to use the Permit Compliance Tracking Status and DMR Non-Receipt data elements. See “NPDES Electronic Reporting Implementation Guidance for Tracking Compliance and Major Designations,” 28 December 2016,
EPA proposes to make changes to the “Facility CAAP Status” data element name and description. States provided feedback to EPA that the current name and description of this data element could be interpreted to mean that this data element applies to all NPDES-regulated entities as the current data description provides “Yes” and “No” as example reference values. This interpretation implies that states would need to provide a “Yes” or “No” for all NPDES-regulated entities.
The proposed changes would make clear that this data element only applies to aquatic animal production facilities. The proposed change would ensure that states do not need to share these data with EPA for facilities that do not have aquatic animal production (
• Method #1 (Based on Facility Production Data)—CAAP identification is automatic based on the comparison of permit application/NOI information against the criteria used in EPA's CAAP NPDES regulations (see 40 CFR 122.24(b)); and
• Method #2 (Authorized NPDES Program Designation)—Using a case-by-case approach the RA may designate any warm or cold-water aquatic animal production facility as a concentrated aquatic animal production facility upon determining that it is a significant contributor of pollution to waters of the United States (see 40 CFR 122.24(c)).
The two methods are sequenced as follows. Facilities seeking NPDES permit coverage that acquire the CAAP status under Method #1 are not evaluated under Method #2 [
EPA proposes changes to the “Permit Component” data element description to clarify its applicability to unpermitted facilities subject to NPDES inspections. EPA proposes these changes as EPA's regulations require authorized NPDES programs to have “inspection and surveillance procedures to determine, independent of information supplied by regulated persons, compliance or noncompliance with applicable program requirements.” See 40 CFR 123.26(b). EPA's NPDES Compliance Monitoring Strategy (CMS) also provides compliance monitoring goals for authorized NPDES programs and guidance regarding inspection of facilities without NPDES permit coverage.
This change would clarify that this data element applies to unpermitted facilities when states are required by EPA regulations to share data about these unpermitted facilities with EPA. This change would also update the regulatory citation for this data element to explicitly include certain unpermitted facilities [
EPA proposes to make changes to the Notice of Termination (NOT) section in the NPDES regulations (40 CFR 122.64(c)). The NPDES eRule made clear that the electronic reporting requirement for NOTs only applied to general permit covered facilities (see Table 1 to Appendix A, 40 CFR part 127). This proposed language clarifies the electronic reporting requirement for NOTs and helps ensure that the state
EPA proposes to update the data description for the “Applicable Effluent Limitations Guidelines” data element to make clear that this data element applies to all NPDES-regulated entities and to clarify EPA's expectation that the authorized NPDES program should identify all applicable effluent limitations guidelines. Making these changes will also allow EPA to delete the “Applicable Categorical Standards” data element. EPA is also proposing to make conforming changes to the regulatory citation and “NPDES Data Group” columns in Table 2 (Appendix A to 40 CFR part 127).
This proposed change will help reduce the burden on states to create a duplicative data element, “Applicable Categorical Standards.” This change will help ensure that EPA and states have an accurate inventory of facilities that meet the applicability criteria of the one or more effluent guidelines as well as allow EPA to maintain an accurate inventory of facilities that do not have any applicable effluent guidelines. Finally, these changes will also help reduce state data sharing burden as the data description makes clear that the Control Authority can use pretreatment program report and the state can use the NOI submissions to manage these data.
EPA proposes to delete the word “Receiving” from the “Receiving Waterbody Name for Permitted Feature” data element name and update the data description. EPA is also proposing to add conforming regulatory citations to 40 CFR 122.21(f)(9) for this data element as well as the “Source Water for Cooling Purposes” data element.
EPA recently updated the NPDES regulations governing individual NPDES permit applications (see 12 February 2019; 84 FR 3324). The Rule added 40 CFR 122.21(f)(9), requires individual permit applications to include the following cooling water information: “An indication of whether the facility uses cooling water and the source of the cooling water.” EPA now proposes a conforming change to the data element in Appendix A. This proposed change would also make clear that this data element is optional for other intake structures. EPA proposes to update the data sharing requirements for both individual and general permit covered facilities. This would ensure that there is consistent and complete reporting nationwide of industrial classification data, which are useful for regulatory decisions and program oversight.
EPA proposes to update the data descriptions for the “NAICS Code” and “NAICS Code Primary Indicator” data elements. EPA is also proposing to add conforming regulatory citations to 40 CFR 122.21(f)(3) and 122.28(b)(2)(ii) for these data elements.
EPA proposes these changes to conform to its updated NPDES permit application regulations (see 12 February 2019; 84 FR 3324), which became effective on June 12, 2019. Since this date, applicants for EPA-issued NPDES permits are required to meet the new application requirements. EPA proposes to update each of the eight NPDES application forms to conform to the February 12, 2019 final rule and improve clarity and usability. States that are authorized to administer the NPDES program might require use of EPA's application forms or might have developed their own state-specific application forms. In either case, the final NPDES Applications and Program Updates Rule provides states up to one year to make conforming programmatic and regulatory changes, and up to two years if statutory changes are needed.
The 2019 NPDES Applications and Program Updates Final Rule requires permit applications to include data on the four-digit Standard Industrial Classification (SIC) codes
EPA proposes to make changes to variance related data elements in Appendix A as well as add new variance related data elements. These variances relate to the following provisions in the CWA:
• Fundamentally different factors (FDFs) (CWA section 301(n));
• Non-conventional pollutants (CWA section 301(c) and (g));
• Water quality related effluent limitations (CWA Section 302(b)(2));
• Thermal discharges (CWA Section 316(a)); and
• Discharges to marine waters (CWA Section 301(h))].
EPA proposes to make conforming changes to the data element citations. EPA proposes to amend Table 2 to Appendix A for these variance data elements to include references to 40 CFR 123.41 (`Sharing of Information') for variances that do not expire (
EPA proposes to include these revised and new data elements in the minimum set of NPDES program data (Appendix A to 40 CFR part 127) as these data would allow EPA and states to better track variance requests and related statuses for the NPDES program. EPA recently updated the NPDES permit application regulations (40 CFR 122.21) and the related forms with the 2019 NPDES Applications and Program Updates final rule. EPA proposes updating the data sharing requirements for both individual and general permit covered facilities. This would ensure that there is consistent and complete reporting nationwide of variance data. EPA is proposing to require states to share these variance data with EPA when they approve NPDES permit coverage. This approach will integrate with the authorized NPDES program's data collection and sharing activities.
EPA will continue to provide technical assistance and support to authorized NPDES programs during the transition to electronic reporting. This includes building electronic reporting tools for authorized NPDES programs that elect to use these tools and to support the development of new data transfer protocols. Authorized NPDES programs can request EPA's assistance for electronic reporting by submitting a request to
EPA offers authorized programs financial assistance through the Exchange Network Grant Program. This program provides funding to states, territories, and federally recognized Indian tribes to support the
EPA will continue to work with authorized NPDES programs to implement NPDES electronic reporting. This includes the use of workgroups to help authorized NPDES programs share data with EPA and to provide recommendations on how EPA should build the NNCR. Authorized NPDES programs can contact the person listed in the
This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.
This action is not an Executive Order 13771 regulatory action because this action is not significant under Executive Order 12866.
The information collection activities in this proposed rule have been submitted for approval to the Office of Management and Budget (OMB) under the PRA. The Information Collection Request (ICR) document that the EPA prepared has been assigned EPA ICR number [2617.01]. You can find a copy of the supporting statement for this ICR in the docket for this rule (see DCN 0016). It is briefly summarized here.
EPA has primary responsibility for ensuring the CWA's NPDES program is effectively and consistently implemented nationwide, thus ensuring that public health and environmental protection goals of the CWA are met. EPA is taking this action pursuant to CWA sections 101(f), 304(i), 308, 402, and 501. The accurate, complete, and timely information collected under this ICR will help EPA and states more efficiently implement the 2015 NPDES eRule. The improved information sharing would increase transparency and accountability and help EPA and authorized NPDES programs collaborate and measure progress in implementing the 2015 NPDES eRule. This information collection would provide EPA with more timely, consistent, and accurate inventory of all general permits and program reports, the number of facilities that must electronically submit reports, and the online location of state electronic reporting tools.
Receiving current high-level data on general permits and program reports is critical to EPA's ability to oversee and manage authorized NPDES programs. Authorizing the burden under this ICR will allow EPA to provide timely assistance to authorized NPDES programs as they implementation the NPDES eRule. The general permits and program reports inventory will help promote efficiencies in NPDES eRule implementation as states will be able to use this information to identify other states that have already developed electronic reporting tools. Additionally, with the implementation of this information collection activity, regulated entities would be able to ensure that they are fully aware of the compliance deadlines and electronic reporting tools for their reporting obligations.
An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for the EPA's regulations in 40 CFR are listed in 40 CFR part 9.
Submit your comments on the Agency's need for this information, the accuracy of the provided burden estimates and any suggested methods for minimizing respondent burden to the EPA using the docket identified at the beginning of this rule. You may also send your ICR-related comments to OMB's Office of Information and Regulatory Affairs via email to
I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities. This action does not affect small entities as the proposed changes in this action only cover states, tribes, and territories that have NPDES program authorization. The RFA defines “small governmental jurisdiction” as the government of a city, county, town, township, village, school district, or special district with a population of less than 50,000 (5 U.S.C. 601(5)). For the purposes of the RFA, States and tribal governments are not considered small governments.
This action does not contain an unfunded mandate of $100 million or more as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The proposed changes in this action help streamline the implementation of the NPDES eRule and provide states with more flexibility. EPA estimates that the additional time and flexibility afforded by the proposed changes will help lower the implementation costs.
This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.
This action does not have tribal implications as specified in Executive Order 13175. This action does not affect small entities as the proposed changes in this action only cover states, tribes, and territories that have NPDES program authorization. Currently there are no tribal governments that are authorized for the NPDES program. Thus, Executive Order 13175 does not apply to this action.
This action is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866, and because the EPA does not believe the environmental health or safety risks addressed by this action present a disproportionate risk to children. The proposed changes in this action only cover states, tribes, and territories that have NPDES program authorization.
This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.
This rulemaking does not involve technical standards.
The EPA believes that this action does not have disproportionately high and adverse human health or environmental effects on minority populations, low-income populations and/or indigenous peoples, as specified in Executive Order 12898 (59 FR 7629, February 16, 1994). The proposed changes in this action only cover states, tribes, and territories that have NPDES program authorization.
Environmental protection, Reporting and recordkeeping requirements.
Environmental protection, Administrative practice and procedure, Confidential business information, Hazardous substances, Reporting and recordkeeping requirements, Water pollution control.
Environmental protection, Administrative practice and procedure, Confidential business information, Hazardous substances, Indians-lands, Intergovernmental relations, Penalties, Reporting and recordkeeping requirements, Water pollution control.
Environmental protection, Administrative practice and procedure, Automatic data processing, Electronic data processing, Hazardous substances, Intergovernmental relations, Reporting and recordkeeping requirements, Sewage disposal, Waste treatment and disposal, Water pollution control.
Environmental protection, Confidential business information, Reporting and recordkeeping requirements, Waste treatment and disposal, Water pollution control.
Environmental protection, Reporting and recordkeeping requirements, Sewage disposal.
For the reasons set forth in the preamble, EPA proposes to amend 40 CFR parts 9, 122, 123, 127, 403, and 503 as follows:
7 U.S.C. 135
The Clean Water Act, 33 U.S.C. 1251
(b) * * *
(15) * * *
(i) * * *
(C) As of December 21, 2023 or an EPA-approved alternative date (see 40 CFR 127.24(e) or (f)), all certifications submitted in compliance with paragraphs (b)(15)(i)(A) and (B) of this section must be submitted electronically by the owner or operator to the Director or initial recipient, as defined in 40 CFR 127.2(b), in compliance with this section and 40 CFR part 3 (including, in all cases, subpart D to part 3), § 122.22, and 40 CFR part 127. 40 CFR part 127 is not intended to undo existing requirements for electronic reporting. Prior to this date, and independent of 40 CFR part 127, owners or operators may be required to report electronically if specified by a particular permit or if required to do so by state law.
(g) * * *
(1) * * *
(iii) Submit the signed certification to the NPDES permitting authority once every five years. As of December 21, 2023 or an EPA-approved alternative date (see 40 CFR 127.24(e) or (f)), all certifications submitted in compliance with this section must be submitted electronically by the owner or operator to the Director or initial recipient, as defined in 40 CFR 127.2(b), in
(b) * * *
(2) * * * (i) Except as provided in paragraphs (b)(2)(v) and (vi) of this section, dischargers (or treatment works treating domestic sewage) seeking coverage under a general permit shall submit to the Director a notice of intent to be covered by the general permit. A discharger (or treatment works treating domestic sewage) who fails to submit a notice of intent in accordance with the terms of the permit is not authorized to discharge, (or in the case of sludge disposal permit, to engage in a sludge use or disposal practice), under the terms of the general permit unless the general permit, in accordance with paragraph (b)(2)(v), contains a provision that a notice of intent is not required or the Director notifies a discharger (or treatment works treating domestic sewage) that it is covered by a general permit in accordance with paragraph (b)(2)(vi). A complete and timely, notice of intent (NOI), to be covered in accordance with general permit requirements, fulfills the requirements for permit applications for purposes of §§ 122.6, 122.21, and 122.26. As of December 21, 2023 or an EPA-approved alternative date (see 40 CFR 127.24(e) or (f)), all notices of intent submitted in compliance with this section must be submitted electronically by the discharger (or treatment works treating domestic sewage) to the Director or initial recipient, as defined in 40 CFR 127.2(b), in compliance with this section and 40 CFR part 3 (including, in all cases, subpart D to part 3), § 122.22, and 40 CFR part 127. 40 CFR part 127 is not intended to undo existing requirements for electronic reporting. Prior to this date, and independent of 40 CFR part 127, discharger (or treatment works treating domestic sewage) may be required to report electronically if specified by a particular permit or if required to do so by state law.
(d) * * *
(3)
(l) * * *
(6) * * *
(i) The permittee shall report any noncompliance which may endanger health or the environment. Any information shall be provided orally within 24 hours from the time the permittee becomes aware of the circumstances. A report shall also be provided within 5 days of the time the permittee becomes aware of the circumstances. The report shall contain a description of the noncompliance and its cause; the period of noncompliance, including exact dates and times), and if the noncompliance has not been corrected, the anticipated time it is expected to continue; and steps taken or planned to reduce, eliminate, and prevent reoccurrence of the noncompliance. For noncompliance events related to combined sewer overflows, sanitary sewer overflows, or bypass events, these reports must include the data described above (with the exception of time of discovery) as well as the type of event (combined sewer overflows, sanitary sewer overflows, or bypass events), type of sewer overflow structure (
(7)
(m) * * *
(3) * * * (i)
(ii)
(c)
(e) * * *
(4)
(c) Permittees that wish to terminate their permit must submit a Notice of Termination (NOT) to their permitting authority. If requesting expedited permit termination procedures, a permittee must certify in the NOT that it is not subject to any pending State or Federal enforcement actions including citizen suits brought under State or Federal law. As of December 21, 2023 or an EPA-approved alternative date (see 40 CFR 127.24(e) or (f)), all NOTs submitted by general permit covered facilities in compliance with this section must be submitted electronically by the permittee to the Director or initial recipient, as defined in 40 CFR 127.2(b), in compliance with this section and 40 CFR part 3 (including, in all cases, subpart D), § 122.22, and 40 CFR part 127. 40 CFR part 127 is not intended to undo existing requirements for electronic reporting. Prior to this date, and independent of 40 CFR part 127, the permittee may be required to report electronically if specified by a particular permit or if required to do so by state law.
Clean Water Act, 33 U.S.C. 1251
The revisions read as follows:
As of December 21, 2022, EPA must prepare public (quarterly and annual) reports as set forth here from information that is required to be submitted by NPDES-regulated facilities and the State Director.
(a) * * *
(2) * * *
(i)
(ii)
(iii)
(iv)
This appendix describes the criteria for reporting Category I violations of NPDES permit effluent limits in the NPDES noncompliance report (NNCR) as specified under paragraph (a)(2)(iii) of this section. Any violation of an NPDES permit is a violation of the Clean Water Act (CWA) for which the permittee is liable. As specified in paragraph (a)(2) of this section, there are two categories of noncompliance, and the table below indicates the thresholds for violations in Category I. An agency's decision as to what enforcement action, if any, should be taken in such cases, shall be based on an analysis of facts, legal requirements, policy, and guidance.
The categorization of permit effluent limit violations depends upon the magnitude and/or frequency of the violation. Effluent violations shall be evaluated on a parameter-by-parameter and outfall-by-outfall basis. The criteria for Category I permit effluent limit violations apply to all Group I and Group II pollutants and are as follows:
a. Criteria for Category I Violations of Monthly Average Permit Effluent Limits—Magnitude and Frequency
Violations of monthly average permit effluent limits which exceed or equal the product of the Technical Review Criteria (TRC) times the permit effluent limit and occur two months in a six-month period. The TRCs for the two groups of pollutants are as follows:
The following is a listing of the Group I and Group II pollutants.
b. Criteria for Category I Violations of Monthly Average Permit Effluent Limits—Chronic Violations of monthly average permit effluent limits which are exceeded in any four months in a six-month period.
33 U.S.C. 1251
(b) States, tribes, and territories that have received authorization from EPA to implement the NPDES program must electronically transfer these data, listed in § 127.21(a), to EPA within 40 days of the completed activity or within 40 days of the receipt of a report from an NPDES permittee, facility, or entity subject to this part [see § 127.1(a)]. EPA may set an alternative compliance deadline for data sharing for one or more facilities, general permit reports, program reports, and related data elements (see 40 CFR 127.24) provided this alternative compliance date does not extend beyond December 21, 2026.
The revision and additions read as follows:
(e) A state, tribe, or territory that is designated by EPA as the initial recipient [see §§ 127.2(b) and 127.27] for an NPDES data group [as defined in § 127.2(c)] may submit a request to EPA to establish an alternative compliance deadline for electronic reporting of one or more general permit reports, program reports, and related data elements (see Table 2 to appendix A). A State may request to establish an alternative compliance deadline for up to three years beyond the currently-applicable date but not beyond December 21, 2026. It is the duty of the authorized NPDES program to re-apply for a new alternative compliance deadline.
(1) The alternative compliance deadline request shall:
(i) Be submitted to EPA by the Director, as defined in 40 CFR 122.2;
(ii) Identify each general permit, program report, and related data elements covered by the request and the corresponding alternative compliance deadline(s);
(iii) Identify each facility covered by the request and the corresponding alternative compliance deadline(s) (Note: This only applies if the request covers some but not all facilities subject to the general permit or program report requirement);
(iv) Be submitted at least 120 days prior to the applicable compliance deadline in Table 1 to 40 CFR 127.16 or an alternative compliance deadline previously approved by EPA; and
(v) Provide a rationale for the delay and enough details (
(2) EPA will review each alternative compliance deadline request to see if it provides enough detail to accurately assess if the state has a reasonable plan to deploy electronic reporting by the requested alternative compliance deadline. EPA will return alternative compliance deadline requests with insufficient detail back to the Director within 30 days of receipt and provide recommendations. EPA will approve or deny each complete alternative compliance deadline request within 120 days of receipt. EPA will provide notice to the authorized NPDES program of EPA's approval or denial. The authorized NPDES program may re-apply if the initial request is denied by EPA.
(3) EPA will update its website after it approves a request to clearly identify the approved alternative compliance deadlines for each facility, general permit report, program report, and related data elements by authorized NPDES program. EPA will also post each alternative compliance deadline request and the corresponding Agency approval or denial notice after each determination. EPA will provide updated information at:
(f) EPA may, as it deems appropriate, establish an alternative compliance deadline for electronic reporting and data sharing for one or more facilities, general permit reports, program reports, and related data elements (see Table 2 to appendix A) in one or more states. EPA may establish an alternative compliance deadline up to three years beyond the currently applicable date, but in no event beyond December 21, 2026. Separately, EPA will provide notice to the one or more authorized NPDES program covered by each alternative compliance deadline. This notice will include a rationale for the delay and enough details (
xii. Revise the entry “Biosolids or Sewage Sludge—Land Application or Surface Disposal Deficiencies” to “Biosolids or Sewage Sludge-Violations” under the “Compliance Monitoring Activity Information (Data Elements Specific to Sewage Sludge/Biosolids Annual Program Reports)” center heading.
The revisions and additions read as follows:
33 U.S.C. 1251
(e) * * * (1) Any Industrial User subject to a categorical Pretreatment Standard (except a Non-Significant Categorical User as defined in § 403.3(v)(2)), after the compliance date of such Pretreatment Standard, or, in the case of a New Source, after commencement of the discharge into the POTW, shall submit to the Control Authority during the months of June and December, unless required more frequently in the Pretreatment Standard or by the Control Authority or the Approval Authority, a report indicating the nature and concentration of pollutants in the effluent which are limited by such categorical Pretreatment Standards. In addition, this report shall include a record of measured or estimated average and maximum daily flows for the reporting period for the Discharge reported in paragraph (b)(4) of this section except that the Control Authority may require more detailed reporting of flows. In cases where the Pretreatment Standard requires compliance with a Best Management Practice (or pollution prevention alternative), the User shall submit documentation required by the Control Authority or the Pretreatment Standard necessary to determine the compliance status of the User. At the discretion of the Control Authority and in consideration of such factors as local high or low flow rates, holidays, budget cycles, etc., the Control Authority may modify the months during which the above reports are to be submitted. For Industrial Users for which EPA or the authorized state, tribe, or territory is the Control Authority, as of December 21, 2023 or an EPA-approved alternative date (see 40 CFR 127.24(e) or (f)), all reports submitted in compliance with this section must be submitted electronically by the industrial user to the Control Authority or initial recipient, as defined in 40 CFR 127.2(b), in compliance with this section and 40 CFR part 3 (including, in all cases, subpart D to part 3), 40 CFR 122.22, and 40 CFR part 127. 40 CFR part 127 is not intended to undo existing requirements for electronic reporting. Prior to this date, and independent of 40 CFR part 127, the Industrial Users for which EPA or the authorized state, tribe, or territory is the Control Authority may be required to report electronically if specified by a particular control mechanism or if required to do so by state law.
(h)
(i)
Sections 405(d) and (e) of the Clean Water Act, as amended by Pub. L. 95-217, sec. 54(d), 91 Stat. 1591 (33 U.S.C. 1345(d) and (e)); and Pub. L. 100-4, title IV, sec. 406(a), (b), 101 Stat., 71, 72 (33 U.S.C. 1251
Class I sludge management facilities, POTWs (as defined in § 501.2 of this chapter) with a design flow rate equal to or greater than one million gallons per day, and POTWs that serve 10,000 people or more shall submit a report on February 19 of each year. As of December 21, 2016, all reports submitted in compliance with this section must be submitted electronically by the operator to EPA when the Regional Administrator is the Director in compliance with this section and 40 CFR part 3 (including, in all cases, subpart D to part 3), 40 CFR 122.22, and 40 CFR part 127. As of December 21, 2023, or an EPA-approved alternative date (see 40 CFR 127.24(e) or (f)), all reports submitted in compliance with this section must be submitted electronically in compliance with this section and 40 CFR part 3 (including, in all cases, subpart D to 40 CFR part 3), 40 CFR 122.22, and 40 CFR part 127. 40 CFR part 127 is not intended to undo existing requirements for electronic reporting. Prior to the compliance deadlines for electronic reporting (see Table 1 in 40 CFR 127.16), the Director may also require operators to electronically submit annual reports under this section if required to do so by state law.
(a) The information in § 503.17(a), except the information in § 503.17 (a)(3)(ii), (a)(4)(ii) and in (a)(5)(ii), for the appropriate requirements on February 19 of each year.
(b) The information in § 503.17(a)(5)(ii)(A) through (a)(5)(ii)(G) on February 19th of each year when 90 percent or more of any of the cumulative pollutant loading rates in Table 2 of § 503.13 is reached at a land application site.
Class I sludge management facilities, POTWs (as defined in 40 CFR 501.2) with a design flow rate equal to or greater than one million gallons per day, and POTWs that serve 10,000 people or more shall submit a report on February 19 of each year. As of December 21, 2016, all reports submitted in compliance with this section must be submitted electronically by the operator to EPA when the Regional Administrator is the Director in compliance with this section and 40 CFR part 3 (including, in all cases, subpart D to 40 CFR part 3), 40 CFR 122.22, and 40 CFR part 127. As of December 21, 2023, or an EPA-approved alternative date (see 40 CFR 127.24(e) or (f)), all reports submitted in compliance with this section must be submitted electronically in compliance with this section and 40 CFR part 3 (including, in all cases, subpart D to 40 CFR part 3), 40 CFR 122.22, and 40 CFR part 127. 40 CFR part 127 is not intended to undo existing requirements for electronic reporting. Prior to the compliance deadlines for electronic reporting (see Table 1 in 40 CFR 127.16), the Director may also require operators to electronically submit annual reports under this section if required to do so by state law.
Class I sludge management facilities, POTWs (as defined in § 501.2 of this chapter) with a design flow rate equal to or greater than one million gallons per day, and POTWs that serve a population of 10,000 people or greater shall submit a report on February 19 of each year. As of December 21, 2016, all reports submitted in compliance with this section must be submitted electronically by the operator to EPA when the Regional Administrator is the Director in compliance with this section and 40 CFR part 3 (including, in all cases, subpart D to 40 CFR part 3), 40 CFR 122.22, and 40 CFR part 127. As of December 21, 2023, or an EPA-approved alternative date (see 40 CFR 127.24(e) or (f)), all reports submitted in compliance with this section must be submitted electronically in compliance with this section and 40 CFR part 3 (including, in all cases, subpart D to part 3), 40 CFR 122.22, and 40 CFR part 127. 40 CFR part 127 is not intended to undo existing requirements for electronic reporting. Prior to the compliance deadlines for electronic reporting (see Table 1 in 40 CFR 127.16), the Director may also require operators to electronically submit annual reports under this section if required to do so by state law.
Environmental Protection Agency (EPA).
Proposed rule.
Pursuant to the Federal Clean Air Act (CAA or the Act), the Environmental Protection Agency (EPA) is proposing to approve a revision to the Louisiana State Implementation Plan (SIP) submitted by the State of Louisiana on May 30, 2019 that pertains to gasoline dispensing facilities (GDFs) in the parishes of Ascension, East Baton Rouge, Iberville, Livingston, West Baton Rouge, and Pointe Coupee. The SIP revision proposed for approval would remove from the SIP the requirement to install Stage II vapor recovery systems and include the requirements for the decommissioning of existing Stage II equipment at GDFs in these areas.
Written comments must be received on or before March 30, 2020.
Submit your comments, identified by Docket No. EPA-R06-OAR-2019-0496, at
Wendy Jacques, EPA Region 6 Office, Infrastructure & Ozone section, 1201 Elm Street, Suite 500, Dallas, TX 75270, 214-665-7395,
Throughout this document “we,” “us,” and “our” means the EPA.
Ozone is a gas composed of three oxygen atoms. Ground-level ozone is generally not emitted directly from a vehicle's exhaust or an industrial smokestack but is created by a chemical reaction between nitrogen oxides (NO
Stage II Vapor Recovery is an air pollution control technology for automobiles. When an automobile or other vehicle is brought into a gas station to be refueled, the empty portion of the gas tank on the vehicle contains gasoline vapors, which are VOCs. When liquid gasoline is pumped into the partially empty gas tank the vapors are forced out of the tank as the tank fills with liquid gasoline. Where air pollution control technology is not used, these vapors are emitted into the air. In the atmosphere, these VOCs can, in the presence of sunlight, react with NO
Onboard refueling vapor recovery (ORVR) is another emission control system that can capture fuel vapors from vehicle gas tanks during refueling. As stated, Stage II vapor recovery systems are specifically installed at gasoline dispensing facilities and capture the refueling fuel vapors at the gasoline pump nozzle. The system carries the vapors back to the underground storage tank at the gasoline dispensing facility to prevent the vapors from escaping to the atmosphere. ORVR systems are carbon canisters installed directly on automobiles to capture the fuel vapors evacuated from the gasoline tank before they reach the nozzle. The fuel vapors captured in the carbon canisters are then combusted in the engine when the automobile is in operation.
Stage II vapor recovery systems and vehicle ORVR systems were initially both required by the 1990 Amendments to the CAA. Under CAA Section 182(b)(3) ozone nonattainment areas classified as moderate and above were required to adopt Stage II requirements with the goal of the technology being implemented on all gas stations by November 1994. CAA section 202(a)(6), requires an onboard system of capturing vehicle refueling emissions, commonly referred to as an ORVR system. In 1994, EPA promulgated ORVR standards (59 FR 16262 (April 6, 1994)). Section 202(a)(6) of the CAA required that the EPA's ORVR standards apply to light-duty vehicles manufactured beginning in the fourth model year after the model year in which the standards were promulgated, and that ORVR systems provide a minimum evaporative emission capture efficiency of 95
On May 16, 2012, EPA issued a national rulemaking making the finding that Stage II systems are in “widespread use” and determined that emission reductions from ORVR alone are essentially equal to and will soon surpass the emission reductions achieved by Stage II alone (see 77 FR 28772 at 28772). In the May 16, 2012 action, we noted that each year, non-ORVR-equipped vehicles continue to be replaced with ORVR-equipped vehicles and Stage II and ORVR systems capture the same VOC emissions and thus, are redundant.
The Baton Rouge ozone area, consisting of Ascension, East Baton Rouge, Iberville, Livingston, and West Baton Rouge Parishes, was designated as nonattainment under the 1-hour ozone NAAQS (56 FR 56694 (November 6, 1991)), the 1997 8-hour ozone NAAQS (69 FR 23857 (April 30, 2004)) and the 2008 8-hour ozone NAAQS (77 FR 30088 (May 21, 2012)). The Baton Rouge ozone area was subject to Stage II under the 1990 Clean Air Act Amendments as it was classified as Serious nonattainment for the 1-hour NAAQS for ozone. In 1994, EPA approved the Louisiana Stage II SIP (59 FR 14112 (March 25, 1994)) that required owners and operators of GDFs to install and operate Stage II vapor recovery equipment in the Louisiana 1-hour ozone nonattainment area. The Baton Rouge ozone area was found to be attaining the 1-hour ozone NAAQS on February 10, 2010 (75 FR 6570), and was redesignated as attainment for the 1997 8-hour ozone NAAQS on November 20, 2011 (76 FR 7400) and the 2008 8-hour ozone NAAQS on December 27, 2016, (81 FR 95051). Under the 2015 ozone NAAQS, all of Louisiana is designated as attainment/unclassifiable (82 FR 54232 (November 16, 2017) and 83 FR 25776 (June 4, 2018)).
The Stage II vapor recovery requirements also apply to Pointe Coupee Parish despite EPA's 1997 removal of Pointe Coupee Parish from the Baton Rouge ozone area and Pointe Coupee's attainment determination for the 1-hour ozone NAAQS. This was due to EPA's prior inclusion of Point Coupee Parish as part of the Baton Rouge 1-hour ozone nonattainment area in 1991 and EPA's approval of the Louisiana Stage II SIP in 1994 (59 FR 14112 (March 25, 1994)).
To determine whether we can approve the SIP revision, we must evaluate the impact of removing the Stage II vapor recovery requirements for the Baton Rouge ozone area which includes the Louisiana parishes of Ascension, East Baton Rouge, Iberville, Livingston, and West Baton Rouge as well as Pointe Coupee. (We hereinafter refer to the parishes within the Baton Rouge ozone area and Pointe Coupee Parish as “the 6-Parish Area.”).
On May 30, 2019, Louisiana submitted revisions to Title 33 of the Louisiana Air Code, Part III, Chapter 21 (denoted LAC 33:III.2132) and corresponding revisions to the Louisiana Stage II Vapor Recovery SIP. In their SIP submittal, Louisiana demonstrated that emissions reductions from ORVR systems are estimated to be negligibly less than those from Stage II systems at GDFs, but that the air quality would not be negatively affected by the removal of Stage II equipment. Because of these two demonstrations, Louisiana requested the withdrawal of Stage II vapor recovery systems requirements for the 6-Parish Area from the SIP.
The revisions to the SIP describe the continued applicability of Stage II requirements until the operator of the GDF completes the decommissioning of the Stage II system; the requirement of the operator of the GDF to submit written notification to the Louisiana Department of Environmental Quality (LDEQ) of its intent to decommission Stage II equipment at least 30 calendar days prior to beginning any decommissioning activity; the requirement that technicians that have appropriate training and certification may perform the Stage II decommissioning procedure; the requirement that the operator shall notify LDEQ in writing no later than 10 days after completion of all decommissioning activities; and the requirement for the GDF to maintain all documents related to the decommissioning onsite at least 4 years and make such documents available upon request. All decommissioning activity must be completed within 30 days after the start date. Any existing GDF in Louisiana shall complete the decommissioning of the Stage II equipment within 18 months of EPA's final approval of this proposed rule. The revisions to the SIP also include a demonstration that the removal of Stage II equipment in the 6-Parish Area is consistent with section 110(l) of the Act.
EPA's primary consideration for determining the approvability of Louisiana's revisions to remove Stage II vapor control requirements and provide for decommissioning of all Stage II equipment in the 6-Parish Area is whether these revisions comply with section 110(l) of the Act. Section 110(l) requires that a revision to the SIP not interfere with any applicable requirement concerning attainment and reasonable further progress (RFP), or any other applicable requirement of the Act. The EPA can approve a SIP revision that removes or modifies control measures in the SIP once the state makes a “noninterference” demonstration that such removal or modification will not interfere with attainment of the NAAQS, RFP or any other CAA requirement. Louisiana must make a demonstration of noninterference in the parishes of Ascension, East Baton Rouge, Iberville,
EPA has reviewed Louisiana's submittal, which specifically revised LAC 33:III.2132 subsections B-F and J, as well as the accompanying SIP narrative, and has concluded that Louisiana's May 30, 2019, SIP revision addresses the EPA's Widespread Use for Onboard Refueling Vapor Recovery and Stage II Waiver (77 FR 28772) and is consistent with EPA's “Guidance on Removing Stage II Gasoline Vapor Control Programs from State Implementation Plans and Assessing Comparable Measures” (EPA-457/B-12-001 (August 7, 2012)).
This minimal increase in VOC emissions from the 6-Parish Area is negligible when comparing the 0.02 to 0.09 tpd with the total amount of VOCs from all anthropogenic sources in the Baton Rouge ozone area. In the current Baton Rouge ozone area maintenance plan, VOC emissions were calculated to be 145.5 tpd in 2011, and projected to be 141.2 tpd in 2022 and 140.8 tpd in 2027 (83 FR 16017 at 16019, (April 13, 2018)).
In addition, the removal of Stage II is consistent with the current maintenance plan for the Baton Rouge ozone area for the 2008 8-hour ozone NAAQS (83 FR 24226 (May 25, 2018)) and the maintenance plan for Pointe Coupee Parish (78 FR 27058 (May 9, 2013)). The approved, revised maintenance plan for the redesignated Baton Rouge area demonstrates attainment of the 2008 8-hour ozone NAAQS through 2027.
For Pointe Coupee Parish, we approved a maintenance plan for the 1997 8-hour ozone standard on May 9, 2013 (78 FR 27058). This maintenance plan demonstrates attainment through 2014. The maintenance plan estimates VOC emissions for 2014 as 7.66 tpd. Assuming a maximum increase of 0.09 tpd VOC due to removal of Stage II vapor recovery requirements, the estimated VOC emissions for 2014 would be 7.66 + 0.09 = 7.75 tpd. Should the VOC emissions reach the maximum estimate of 7.75 tpd, they would still be less than the 2002 base year emissions of 8.63 tpd and thus, a maximum increase of 0.09 tpd VOC emissions is consistent with the maintenance plan and would not interfere with the attainment or maintenance of the 1997 8-hour NAAQS in this parish.
For the 2015 ozone standard, all six parishes are designated attainment/unclassifiable. As noted above, we believe that removal of Stage II vapor recovery systems would have a negligible impact on ozone levels and the small increase is consistent with the 2008 ozone maintenance plan for the Baton Rouge area and the 1997 8-hour maintenance plan for Pointe Coupee Parish. Thus, approval of the SIP revision would not interfere with any applicable requirement concerning attainment and maintenance of any ozone standard and is compliant with CAA section 110(l).
The EPA is proposing to approve revisions to the Louisiana SIP that control emissions of VOCs and pertain to the removal of Stage II vapor recovery equipment submitted on May 30, 2019. Specifically, we are proposing to approve revisions to subsections B-F and J within LAC 33:III.2132 that remove from the SIP, the requirement for Stage II from the six parishes of Ascension, East Baton Rouge, Iberville, Livingston, Pointe Coupee, and West Baton Rouge and related revisions that address the removal of Stage II equipment. We are proposing to find that the SIP demonstrates that the removal of Stage II equipment in the six parishes meets section 110(l) of the Act.
In this action, we are proposing to include in a final rule regulatory text that includes incorporation by reference. In accordance with the requirements of 1 CFR 51.5, we are proposing to incorporate by reference revisions to the Louisiana regulations as described in the Proposed Action section above. We have made, and will continue to make, these documents generally available electronically through
Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely proposes to approve state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735 (October 4, 1993)) and 13563 (76 FR 3821 (January 21, 2011));
• Is not an Executive Order 13771 (82 FR 9339 (February 2, 2017)) regulatory action because SIP approvals are exempted under Executive Order 12866;
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255 (August 10, 1999));
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885 (April 23, 1997));
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355 (May 22, 2001));
• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629 (February 16, 1994)).
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the proposed rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249 (November 9, 2000)).
Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Ozone, Volatile organic compounds.
42 U.S.C. 7401
Environmental Protection Agency (EPA).
Proposed rule.
Pursuant to the Federal Clean Air Act (CAA or Act), the EPA is proposing to approve elements of two State Implementation Plan (SIP) submittals from Louisiana for the 2015 ozone (O
Written comments must be received on or before March 30, 2020.
Submit your comments, identified by Docket Number EPA-R06-OAR-2019-0211, at
Sherry Fuerst, 214-665-6454,
Throughout this document wherever “we,” “us,” or “our” is used, we mean the EPA.
Under section 109 of the CAA, EPA establishes NAAQS to protect human health and public welfare. On October 26, 2015, the EPA revised the primary and secondary 8-hour ozone NAAQS from 0.075 ppm to 0.070 ppm to provide increased protection of public health and the environment (80 FR 65291). The primary standards are set to protect human health, while secondary standards are set to protect public welfare.
Whenever EPA promulgates a new or revised NAAQS, CAA section 110(a)(1) requires states to make SIP submissions to provide for the implementation, maintenance, and enforcement of the NAAQS. This particular type of SIP submission is commonly referred to as an “infrastructure SIP” or “i-SIP”. These submissions must meet the various requirements of CAA section 110(a)(2), as applicable. Due to ambiguity in some of the language of CAA section 110(a)(2), EPA believes that it is appropriate to interpret these provisions in the specific context of acting on infrastructure SIP submissions. EPA has previously provided comprehensive guidance on the application of these provisions through a guidance document for infrastructure SIP submissions and through regional actions on infrastructure submissions.
The State of Louisiana's i-SIP certification, submitted on February 7, 2019, and the certification submitted on November 8, 2019, intend to demonstrate how the existing Louisiana SIP meets the applicable CAA section 110(a)(2) requirements for the 2015 ozone NAAQS. Our technical evaluation of these submittals is provided in the Technical Support Document (TSD) for this action.
The State's submissions on dated February 7, 2019 and November 8, 2019 are intended to demonstrate how the existing Louisiana SIP meets the infrastructure requirements for the 2015 ozone NAAQS. The February 7, 2019 submission addresses most elements pertaining to CAA section 110(a)(2) requirements for the 2015 ozone NAAQS, while the November 8, 2019 submission focuses on Section 110(a)(2)(D) requirements for the 2015 ozone NAAQS. We are not evaluating or proposing action on portions of the submissions pertaining to 110(a)(2)(D)(i) as described below. As mentioned in the previous section, a detailed discussion of our evaluation can be found in the TSD for this action, accessible through
The Louisiana Air Control Law found in the Louisiana Environmental Quality Act at Louisiana Revised Statutes (Louisiana Revised Statutes 30:2054 (La R.S. 30:2054)) provides the Secretary of the Louisiana Department of Environmental Quality (LDEQ) with broad legal authority. The Secretary can adopt emission standards and compliance schedules which are applicable to regulated entities; emission standards and limitations; and any other measures necessary for attainment and maintenance of national standards. The Secretary can also enforce applicable laws, regulations, standards and compliance schedules, and seek injunctive relief. This authority has been employed in the past to adopt and submit multiple revisions to the Louisiana SIP. The approved SIP for Louisiana is documented at 40 CFR part 52.970, Subpart T.
The EPA is therefore proposing to find that the Louisiana SIP meets the requirements of section 110(a)(2)(A) of the CAA with respect to the 2015 ozone NAAQS.
La R.S. 30:2011(C)(1)(b) provides LDEQ with the authority to collect air quality monitoring data, quality-assure the results, and report the data. LAC
In summary, Louisiana meets the requirements to: Establish, operate, and maintain an ambient air monitoring network; collect and analyze the monitoring data; and make the data available to the EPA upon request. The EPA is proposing to find that the current Louisiana SIP meets the requirements of CAA section 110(a)(2)(B) with respect to the 2015 ozone NAAQS.
Based upon review of the SIP submissions for the 2015 ozone NAAQS and relevant statutory and regulatory authorities and provisions referenced in the submissions or referenced in the Louisiana SIP, the EPA is proposing to find that the requirements of CAA section 110(a)(2)(C) are met.
Section 110(a)(2)(D)(i)(I):
Sub-element 1 requires the SIP must prohibit emissions within Louisiana from contributing significantly to the nonattainment of the NAAQS in other states, and;
Sub-element 2 requires the SIP prohibit emissions within Louisiana from interfering with the maintenance of the NAAQS in other states.
Section 110(a)(2)(D)(i)(II):
Sub-element 3 requires the SIP must prohibit emissions within Louisiana from interfering with measures required to prevent significant deterioration in other states and;
Sub-element 4 requires the SIP must prohibit emissions within Louisiana from interfering with measures required to protect visibility in other states.
CAA 110(a)(2)(D)(ii) requires that states comply with the requirements listed in sections 126 of the CAA which is designed to aid in the abatement of interstate pollution and 115 of the CAA which were designed to aid in the abatement of international pollution. Section 115 authorizes the Administrator to require a state to revise its SIP under certain conditions to alleviate international transport into another country. Section 126(a) requires new or modified sources to notify neighboring states of potential impacts from the source. Section 126(b) provides that any state or political subdivision may petition the Administrator for a finding that a major source or group of stationary sources emits or would emit any air pollutant in violation of the prohibition of section 110(a)(2)(D)(ii) after public hearing. CAA 126(b) and (c) could occur if (1) the Administrator has, in response to a petition, made a finding under section 126(b) that emissions from a source or sources within the air agency's jurisdiction emit prohibited amounts of air pollution relevant to the new or revised NAAQS for which the infrastructure SIP is being made; and (2) under section 126(c), the Administrator has required the source or sources to cease construction, cease or reduce operations, or comply with emissions limitations and compliance schedule requirements for continued operation.
At this time, we are proposing approval that the SIP meets the requirements sub-element 3 of Section 110(a)(2)(D)(i)(I). We are also proposing approval that the SIP meets the
For 110(a)(2)(D)(i)(II), Louisiana has EPA-approved PSD SIP provisions which will limit Louisiana emissions from new major sources or major modifications, which will help ensure that Louisiana will not significantly contribute to nonattainment or interfere with maintenance of the 2015 ozone NAAQS in other states in the future. As we have approved the Louisiana comprehensive PSD program, we propose to approve that the current SIP meets CAA section 110(a)(2)(D)(i)(II) sub-element 3 requirements.
CAA section 110(a)(2)(D)(ii) requires that the SIP contain adequate provisions insuring compliance with the applicable requirements of section 126 (relating to interstate pollution abatement) and section 115 (relating to international pollution abatement). As stated in their submittal, Louisiana meets the section 126 requirements as (1) they have a fully approved PSD SIP (81 FR 74923, October 28, 2016), which includes notification to neighboring air agencies of potential impacts from each new or modified major source, and (2) no source or sources have been identified by the EPA as having any interstate impacts under CAA section 126 in any pending action related to any air pollutant.
There are no findings under section 115 of the CAA against Louisiana with respect to the 2015 ozone NAAQS.
Based upon our review of the SIP submissions for the 2015 ozone NAAQS and relevant statutory and regulatory authorities and provisions referenced in the submissions or referenced in the Louisiana SIP, the EPA is proposing to find that the requirements of CAA section 110(a)(2)(D)(ii) are met.
The i-SIP submissions for the 2015 ozone NAAQS describe the SIP regulations governing the various functions of personnel within the LDEQ, including the administrative, technical support, planning, enforcement, and permitting functions of the program.
The duties, powers and structure of the LDEQ (described at La R.S. 30:2011.F) provide that “the basic personnel [* * *] shall be employed or provided by the department:” and the LDEQ may contract, employ, and compensate such assistance on a full or part-time basis as may be necessary to carry out the provisions of this Subtitle. In addition, the State has the Environmental Trust Fund, established at La R.S. 30:2015, which is used, in part, to “defray the cost to the State of permitting, monitoring, * * * maintaining and administering the programs provided for under the Louisiana Environmental Quality Act.”
There are Federal sources of funding for the implementation of the NAAQS, for example the CAA sections 103 and 105 provide grant funds. The LDEQ receives Federal funds on an annual basis, under sections 103 and 105 of the Act, to support its air quality programs. Fees collected for motor vehicle inspections, non-Title V permit programs, and other inspections, maintenance and renewals required of other air pollution sources also provide necessary funds to help implement the State's air programs. Information on permitting fees is provided in the discussion for 110(a)(2)(L) below. The Secretary has the power and duty “to receive and budget duly appropriated monies and to accept, receive, and administer grants or other funds or gifts from public and private agencies, including the Federal government to carry out the provisions and purposes of this Subtitle.” (La R.S. 30:2011.D.10). The SIP approved rule at 33 LAC Chapter 1, section 101 describes the LDEQ as the State's air pollution control agency and describes its enforcement authority, referencing the 1983 Louisiana Environmental Quality Act (54 FR 9783, March 8, 1989).
As required by the CAA and the SIP, the majority of the members that compose any board or body which approves permits or enforcement orders must not derive any “significant portion” of their income from persons subject to permits and enforcement orders or persons who appear before the board on issues related to the CAA or the Louisiana Air Quality Rules (La. R.S. 30:2014.1). The members of the board or body, or the head of an agency with similar powers, are required to adequately disclose any potential conflicts of interest.
Louisiana has not delegated any authority to implement any of the provisions of its plan to local governmental entities. The LDEQ acts as the primary air pollution control agency.
Based upon review of the SIP submissions for the 2015 ozone NAAQS and relevant statutory and regulatory authorities
LAC 33:III Chapter 9 authorizes the LDEQ to require persons engaged in operations which result in air pollution to monitor or test emissions and to file reports containing information relating to the nature and amount of emissions. There are also SIP approved state regulations pertaining to sampling and testing and requirements for reporting of emissions inventories (81 FR 4891 (January 28, 2016)). In addition, SIP approved rules establish general requirements for maintaining records and reporting emissions.
The LDEQ uses this information, in addition to information obtained from other sources, to track progress towards maintaining the NAAQS, develop
Based upon review of the SIP submissions for the 2015 ozone NAAQS and relevant statutory and regulatory authorities and provisions referenced in the submissions or referenced in the Louisiana SIP, the EPA is proposing to find that the requirements of CAA section 110(a)(2)(F) are met.
La R.S. 30:2011.D.15 provides LDEQ with the required authority to address environmental emergencies, and LDEQ has contingency plans to implement the emergency episode provisions in the SIP. The LDEQ promulgated the “Prevention of Air Pollution Emergency Episodes,” which includes contingency measures, and these provisions were approved into the SIP in 1989 (54 FR 9783, March 8, 1989). The episode criteria and contingency measures are found in LAC 33.III Chapter 56.
Louisiana has general emergency powers to address any possible dangerous air pollution episode, if necessary, to protect the environment and public health.
Based upon review of the infrastructure SIP submissions, the EPA is proposing to find that the requirements of CAA section 110(a)(2)(G) are met.
La R.S. 30:2011 authorizes the LDEQ to revise the Louisiana SIP, as necessary, to account for revisions of an existing NAAQS, establishment of a new NAAQS, to attain and maintain a NAAQS, to abate air pollution, to adopt more effective methods of attaining a NAAQS, and to respond to EPA SIP calls concerning NAAQS adoption or implementation.
Based upon review of the infrastructure SIP submissions, the EPA is proposing to find that the requirements of CAA section 110(a)(2)(H) are met.
The EPA does not expect infrastructure SIP submissions to address element I. The specific SIP submissions for designated nonattainment areas, as required under CAA title I, part D, are subject to different submission schedules than those for CAA section 110 infrastructure elements. Instead, the EPA will take action on part D attainment plan SIP submissions through a separate rulemaking process governed by the requirements for nonattainment areas, as described in part D.
In addition, the La R.S provides the LDEQ the power and duty to establish cooperative agreements with local authorities, and consult with other states, the federal government and other interested persons or groups in regard to matters of common interest in the field of air quality control (La. R.S. 30:2032). Furthermore, as found in LAC 33:III Chapter 5, the Louisiana PSD SIP rules mandate that the LDEQ provide for public participation and notification regarding permitting applications to any other state or local air pollution control agencies, local government officials of the city or county where the source will be located, tribal authorities, and Federal Land Manager (FLMs) whose lands may be affected by emissions from the source or modification (LAC 33:III.509). Additionally, these rules require the LDEQ to consult with FLMs regarding permit applications for sources with the potential to impact Class I Federal Areas. The SIP also includes a commitment to consult continually with the FLMs on the review and implementation of the visibility program. Louisiana works with the FLMs providing notification or early consultation with a new or modifying source prior to the submission of a permit application and with PSD projects. Likewise, the State's Transportation Conformity SIP rules (LAC 3:III Chapter 13) provide for interagency consultation, resolution of conflicts, and public notification.
(2)
(3)
(4)
Based upon review of the SIP submissions for the 2015 ozone NAAQS and relevant statutory and regulatory authorities and provisions referenced in the submissions or referenced in the Louisiana SIP, the EPA is proposing to find that the requirements of CAA section 110(a)(2)(J) are met.
The LDEQ has the power and duty, under La R.S. 30:2011
The La R.S. authorizes and requires LDEQ to cooperate with the federal government and local authorities concerning matters of common interest in the field of air quality control, thereby allowing the agency to make such submissions to the EPA. LAC 33:III.509.L(1) states that “all estimates of ambient concentrations required under this Subsection shall be based on applicable air quality models, databases, and other requirements specified in Appendix W of 40 CFR part 51”.
Based upon review of the SIP submissions for the 2015 ozone NAAQS and relevant statutory and regulatory authorities and provisions referenced in the submissions or referenced in the Louisiana SIP, the EPA is proposing to find that the requirements of CAA section 110(a)(2)(K) are met.
The State has met this requirement as it has a fully developed fee system in place which is outlined in LAC 33:III Chapter 2 and is approved as part of the SIP. See element (E) above for the description of the mandatory collection of permitting fees outlined in the SIP.
Based upon review of the SIP submissions for the 2015 ozone NAAQS and relevant statutory and regulatory authorities and provisions referenced in the submissions or referenced in the Louisiana SIP, the EPA is proposing to find that the requirements of CAA section 110(a)(2)(L) are met.
See the discussion for element (J) above for a description of the SIP's public participation process, the authority to advise and consult, and the PSD SIP's public participation requirements. Additionally, the LDEQ noted that La R.S. 30:2011(D)(21) also requires initiation of cooperative action between local authorities and the LDEQ, between one local authority and another, or among any combination of local authorities and the LDEQ for control of air pollution in areas having related air pollution problems that overlap the boundaries of political subdivisions, and has authority to enter into agreements and compacts with adjoining states and Indian tribes, where appropriate. The transportation conformity component of the Louisiana SIP requires that interagency consultation and opportunity for public involvement be provided before making transportation conformity determinations and before adopting applicable SIP revisions on transportation-related issues. (LAC 33:III.1434).
Based upon review of the SIP submissions for the 2015 ozone NAAQS and relevant statutory and regulatory authorities and provisions referenced in the submissions or referenced in the Louisiana SIP, the EPA is proposing to find that the requirements of CAA section 110(a)(2)(M) are met.
The EPA is proposing to approve the February 7, 2019 submittal, and portions of the November 8, 2019 submittal for Louisiana pursuant to the requirements of CAA sections 110(a)(1) and (2) as applicable to the 2015 ozone NAAQS. Table 1 below outlines the specific actions the EPA is proposing to approve. As mentioned earlier in this action, the EPA is not taking action on portions of CAA section 110(a)(2)(D)(i) for Louisiana for the 2015 ozone NAAQS.
Based upon our review of these infrastructure SIP submissions and relevant statutory and regulatory authorities and provisions referenced in the State's submissions or referenced in the Louisiana SIP, the EPA finds that Louisiana has the infrastructure in place to address required elements of CAA sections 110(a)(2)(A)-(C), (D)(i)(II) sub-element 3, (D)(ii)-(H), and (J)-(M) to ensure that the 2015 ozone NAAQS is implemented throughout the State of Louisiana.
Under the CAA, the Administrator is required to approve SIP submissions that comply with provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely proposes to approve state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:
• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);
• Is not an Executive Order 13771 (82 FR 9339, February 2, 2017) regulatory action because SIP approvals are exempted under Executive Order 12866;
• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501
• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601
• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);
• Does not have federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);
• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);
• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and
• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).
In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the proposed rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).
Environmental protection, Air pollution control, Ozone, Incorporation by reference, Reporting and recordkeeping requirements.
42 U.S.C. 7401
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of availability; request for comments.
The Gulf of Mexico (Gulf) Fishery Management Council (Council) has submitted Amendment 51 to the Fishery Management Plan for the Reef
Written comments must be received by April 28, 2020.
You may submit comments on Amendment 51 identified by “NOAA-NMFS-2019-0116” by either of the following methods:
•
•
Electronic copies of Amendment 51, which includes an environmental assessment, a fishery impact statement, a Regulatory Flexibility Act analysis, and a regulatory impact review, may be obtained from
Peter Hood, NMFS Southeast Regional Office, telephone: 727-824-5305, email:
The Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) requires each regional fishery management council to submit any FMP or amendment to NMFS for review and approval, partial approval, or disapproval. The Magnuson-Stevens Act also requires that NMFS, upon receiving an FMP or amendment, publish an announcement in the
The Council prepared the FMP being revised by Amendment 51, and, if approved, Amendment 51 would be implemented by NMFS through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Act.
Gray snapper in the Gulf exclusive economic zone (EEZ) are managed as a single stock with a stock annual catch limit (ACL), and a stock annual catch target (ACT). There is no allocation between the commercial and recreational sectors. Gray snapper occur in estuaries and shelf waters of the Gulf, and are particularly abundant off south and southwest Florida.
Generally, the fishing season is open year-round, January 1 through December 31. However, accountability measures (AMs) for gray snapper specify that if commercial and recreational landings exceed the stock ACL in a fishing year, then during the following fishing year if the stock ACL is reached or is projected to be reached, the commercial and recreational sectors will be closed for the remainder of the fishing year. The gray snapper ACL and AMs were implemented in 2012 (76 FR 82044; December 29, 2011) and the stock ACL of 2.42 million lb (1.1 million kg), round weight, was not exceeded between 2012 and 2018. A preliminary review of the most recent landings data suggest the ACL will also not be exceeded in 2019. However, landings in 2014 and 2016 did exceed the ACLs proposed in Amendment 51. Unless stated otherwise, all weights in this notice are described in round weight.
In 2018, the stock status of gray snapper was evaluated for the first time through a Southeast Data, Assessment, and Review benchmark stock assessment (SEDAR 51). SEDAR 51 was completed and reviewed by the Council's Scientific and Statistical Committee (SSC) in May 2018. The SSC accepted the gray snapper assessment as the best scientific information available and determined that the stock is experiencing overfishing as of 2015 because the fishing mortality rate (F) in 2015 was greater than the maximum fishing mortality threshold (MFMT). However, the SSC was not able to determine if the stock is overfished because the maximum sustainable yield (MSY) and minimum stock size threshold (MSST) for gray snapper are not specified in the FMP.
Amendment 51 includes actions to set the MSY, MSST, OY, and modify the MFMT, overfishing limit (OFL), acceptable biological catch (ABC), ACL and ACT for the gray snapper stock in the Gulf. Amendment 51 also updates the goals and objectives of the FMP.
SEDAR 51 could not estimate the actual MSY with the best scientific information available. Therefore, the Council considered alternatives for an MSY proxy that uses the spawning potential ratio (SPR). The SPR is the ratio of the average number of eggs per fish over its lifetime when the stock is fished compared to the same value when the stock is not fished. The SPR assumes that a certain amount of fish must survive and spawn in order to replenish the stock. Analyses of stocks with various life histories suggest that, in general, MSY is most commonly associated with the yield when fishing at an F that corresponds to an SPR between 30 and 40 percent.
After reviewing the SEDAR 51 assessment, the SSC recommended that the MSY proxy be set at the yield when fishing at an F corresponding to 30 percent SPR (F
The Council selected the yield when fishing at F
NMFS uses the MSST and MFMT to determine if a stock is overfished or undergoing overfishing, respectively. If the stock biomass falls below the MSST,
Currently, the MFMT is equal to F
The MSST needs to be equal or less than the biomass (B) capable of producing MSY or MSY proxy (B
The Council determined that the OY should be the yield when fishing at 90 percent of F
The current OFL, ABC, and ACL for gray snapper were established in the Generic ACL/AM Amendment using the Council's ABC control rule for stocks that have not been assessed, but are stable over time (76 FR 82044; December 29, 2011). The OFL is equal to 2.88 million lb (1.31 million kg), which is the mean plus 2.0 standard deviations of the annual landings from 1998 through 2008. The ABC is equal to 2.42 million lb (1.1 million kg), which is the mean plus 1.0 standard deviation of the annual landings from 1998 through 2008. The ACL is equal the ABC, and the ACT is 14 percent less than the ACL at 2.08 million lb (0.9 million kg).
Amendment 51 would modify the OFL and ABC consistent with the projections from SEDAR 51 for the MSY proxy selected by the Council and the SSC recommendations. The OFLs would be 2.58 million lb (1.17 million kg) for 2020, and 2.57 million lb (1.166 million kg) for 2021 and subsequent fishing years. The ABCs would be 2.51 million lb (1.14 million kg) for 2020 and subsequent years. The Council then used its ACL/ACT control rule to determine that an 11 percent buffer between the ABCs and ACLs was appropriate to account for management uncertainty. This results in Gulf gray snapper stock ACLs that would be 2.24 million lb (1.02 million), round weight, for the 2020 fishing year. In 2021, and subsequent fishing years, the ACL would be set at 2.23 million lb (1.01 million kg), round weight.
The gray snapper ACT is not currently used for management purposes. Therefore, the Council decided not to set an ACT through Amendment 51.
A proposed rule to implement Amendment 51 has been drafted. In accordance with the Magnuson-Stevens Act, NMFS is evaluating the proposed rule for Amendment 51 to determine whether it is consistent with the FMP, the Magnuson-Stevens Act, and other applicable law. If that determination is affirmative, NMFS will publish the proposed rule in the
The Council has submitted Amendment 51 for Secretarial review, approval, and implementation. Comments on Amendment 51 must be received by April 28, 2020. Comments received during the respective comment periods, whether specifically directed to Amendment 51 or the proposed rule, will be considered by NMFS in its decision to approve, partially approve, or disapprove Amendment 51. Comments received after the comment periods will not be considered by NMFS in this decision. All comments received by NMFS on Amendment 51 or the proposed rule during their respective comment periods will be addressed in the final rule.
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Proposed rule; request for comments.
NMFS issues a proposed rule to implement Amendment 109 to the Fishery Management Plan for Groundfish of the Gulf of Alaska (GOA FMP) and to implement a regulatory amendment to the regulations governing pollock fishing in the Gulf of Alaska. This proposed rule will reduce operational and management inefficiencies in the Central Gulf of Alaska and Western Gulf of Alaska trawl catcher vessel pollock and Pacific cod fisheries by reducing regulatory time gaps between the pollock seasons, and changing Gulf of Alaska Pacific cod seasonal apportionments to allow greater harvest opportunities earlier in the year. This action is intended to promote the goals and objectives of the Magnuson-Stevens Fishery Conservation and Management Act, the GOA FMP, and other applicable laws.
Submit comments on or before March 30, 2020.
Submit your comments, identified by docket number NOAA-NMFS-2019-0125, by either of the following methods:
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•
Electronic copies of the draft Environmental Assessment and the Regulatory Impact Review (collectively referred to as the “Analysis”) prepared for this proposed rule may be obtained from
Joseph Krieger, 907-586-7228 or
NMFS manages the U.S. groundfish fisheries of the Gulf of Alaska (GOA) under the GOA FMP. The North Pacific Fishery Management Council (Council) prepared, and the Secretary of Commerce (Secretary) approved, the GOA FMP under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), 16 U.S.C. 1801
The Council recommended Amendment 109 to the GOA FMP (Amendment 109) and a regulatory amendment for pollock fisheries in the Gulf of Alaska (GOA). This proposed rule would implement Amendment 109 by changing CGOA and WGOA Pacific cod seasonal apportionments to increase the trawl catcher vessel (CV) sector's A season total allowable catch (TAC) while proportionally decreasing the sector's B season TAC. This proposed rule also would implement the Council's regulatory amendment by combining the Central Gulf of Alaska (CGOA) and Western Gulf of Alaska (WGOA) trawl CV pollock fishery A and B seasons into a single season (redesignated as the A season), and the C and D seasons into a single season (redesignated as the B season), and by changing the annual start date of the redesignated pollock B season from August 25 to September 1. The proposed changes for pollock and Pacific cod would only be applicable to the CGOA and the WGOA, which are comprised of NMFS statistical areas 610 (WGOA) and 620 and 630 (CGOA) (see Figure 3 to part 679). This preamble uses the term “management area” to refer to “statistical area” to avoid confusion with State of Alaska “statistical areas.” Also, the term “management area” is commonly used by harvesters and processors to refer to NMFS statistical areas. In recommending Amendment 109 and the regulatory amendment, the Council intends to provide participants with an opportunity to increase fishery yield, increase management flexibility, and potentially decrease prohibited species catch (PSC) in the CGOA and WGOA while not redistributing fishing opportunities between management areas or harvesting sectors.
A notice of availability (NOA) for Amendment 109 was published in the
This proposed rule would modify the seasonal apportionment of pollock and Pacific cod TAC in the CGOA and WGOA. The purpose of this action is to reduce operational and management inefficiencies in the CGOA and WGOA trawl CV pollock and Pacific cod fisheries by (1) reducing regulatory time gaps between the pollock fishery A and B seasons and the C and D seasons, and (2) changing seasonal Pacific cod apportionments in the GOA to allow greater harvest opportunities earlier in the year. Modifying the seasonal allocations of pollock and Pacific cod could allow the fisheries to more fully harvest the TAC of GOA pollock and Pacific cod, increase management flexibility, and potentially decrease PSC while not redistributing fishing opportunities between management areas or harvest sectors. The following sections describe (1) the affected fisheries participants and the current seasonal allocations of pollock and Pacific cod in the CGOA and WGOA, (2) the need for this action, and (3) this proposed rule.
The trawl groundfish fisheries in the GOA include fisheries for pollock, sablefish, several rockfish species, numerous flatfish species, Pacific cod, and other groundfish. Trawl gear captures groundfish by towing a net above or along the ocean floor. This proposed rule would affect the trawl fisheries for pollock and Pacific cod in two specific areas of the GOA: (1) The CGOA regulatory area (comprised of management areas 620 and 630), and (2) the WGOA regulatory area (comprised of management area 610). These specific areas are defined at § 679.2. This proposed action would apply only to the federally permitted CVs using trawl gear to harvest pollock or Pacific cod in management areas 610, 620, and 630 of the GOA. This action would not apply to the Eastern GOA West Yakutat District (management area 640).
Regulations at § 679.4(k) require trawl vessels participating in the GOA pollock and Pacific cod fisheries to possess a License Limitation Program license (LLP). Overall, 124 CV LLPs are endorsed for GOA trawl fishing. Ninety-
The four pollock seasons for the CGOA and WGOA (management areas 610, 620, and 630) are currently defined in regulations at § 679.23(d)(2) as follows:
Through the annual harvest specifications process, NMFS establishes pollock TACs for management areas 610, 620, and 630 within the CGOA and the WGOA. These TACs are established in proportion to the distribution of the pollock biomass in those areas as determined by the most recent NMFS surveys. In addition, the regulations at § 679.20(a)(5)(iv)(B) state that 25 percent of the combined pollock TAC for the CGOA and WGOA is allocated to each of the four seasons. The seasonal apportionments are then further apportioned across management areas (
Over the last 15 years, the seasonal pollock biomass distribution has shifted substantially, resulting in relatively smaller seasonal apportionments in management area 610—most notably in the A and B seasons—while substantially increasing seasonal apportionments and annual TACs in management area 620 and, to a lesser degree, management area 630. In 2003, management area 610 received 25.00 percent of the A and B season apportionments, and 47.00 percent of the C and D season apportionments. In 2018, management area 610 received only 3.50 percent of the A and B season apportionments, and 36.59 percent of the C and D season apportionments. Over the same period, management area 620 went from 56.00 percent to 72.54 percent of the A season apportionment, and from 66.00 percent to 85.39 percent of the B season apportionment. For the C and D seasons, management area 620 went from 23.00 percent to 26.59 percent of the C and D season apportionments. Seasonal biomass distributions for the WGOA and CGOA pollock regulatory areas are summarized in Table 2-1 in the Analysis. The seasonal biomass distribution aspect of annual harvest specifications is designed so that the pollock fleet is able to harvest fish where they are occurring, and not to allocate harvest opportunities to one area relative to another.
NMFS inseason managers monitor the catch of pollock and close the directed pollock fishery in each management area when they determine the seasonal apportionment will be taken. Because this process is based on many variable factors, sometimes catch exceeds the seasonal apportionment and sometimes catch is less than the seasonal apportionment.
NMFS' objective is to allow for optimal harvest while avoiding an overage of the seasonal apportionment or the annual TAC. TAC that is not harvested in one area or season that cannot be reallocated to a subsequent season is not made available for later harvest. TAC that remains at the end of the D season is not rolled over to the following calendar year.
After each management area's overages or underages are accounted for, NMFS has the ability to reallocate, or “rollover,” pollock that is not harvested in one season to the subsequent season in the same or other management area(s) according to a prescribed series of steps that are predicated on the area TAC levels and seasonal apportionments established in the annual harvest specifications and are described in detail in Section 2.1.1 in the Analysis.
Regulations at § 679.20(a)(5)(iv)(B) state that unharvested pollock may be added to a subsequent seasonal allocation provided that the revised seasonal apportionment does not exceed 20 percent of the subsequent season's pollock apportionment for the management area. This provision also states that any rollover of unharvested pollock is applied first to the subsequent season in the same management area, and only then may any remaining pollock be further reallocated to other GOA management areas. The purpose of the rollover is to help fishery participants harvest as much of the TAC as possible. However, the rollover regulations are designed to mitigate incentives for the fleet to underharvest or overharvest the seasonal pollock apportionment in a management area in order to influence the amount of pollock available in the subsequent season.
NMFS establishes annual WGOA and CGOA Pacific cod TACs for the WGOA and CGOA and apportions these TACs across two seasons. NMFS apportions 60 percent of the annual WGOA and CGOA Pacific cod TACs to the A season, and apportions 40 percent of the annual WGOA and CGOA Pacific cod TACs to the B season. For vessels deploying trawl gear, the A season occurs from January 20 through June 10, and the B season occurs from September 1 through November 1.
Since the implementation of Amendment 83 to the GOA FMP in 2012 (76 FR 74670, December 1, 2011), NMFS, after subtracting a set-aside for the jig gear sector, also allocates the annual WGOA and CGOA Pacific cod TACs among five sectors in the WGOA and six sectors in the CGOA. Each sector's allocation is apportioned between the A and B seasons in each area, and the ratio for each sector's seasonal apportionment is not required to be a 60:40 percent ratio. However, for all gear (trawl and non-trawl) and operational-type (CV and catcher/processors (C/Ps)) sectors, the total of A season sector apportionments in each area equals 60 percent of the annual Pacific cod TAC, and the total of B season sector apportionments in each area equals 40 percent of the annual Pacific cod TAC.
Regulations at Section 679.20(a)(12)(i) and Tables 2-2 and 2-3 in the Analysis show the seasonal percentage allocations for each sector. These tables illustrate that no sector, in isolation, experiences a 60:40 percent seasonal TAC split. For example, the CGOA trawl CV sector is currently allocated 21.1 percent of the annual CGOA Pacific cod TAC in the A season and 20.5 percent of the annual CGOA Pacific cod TAC in the B season. Those two figures are at a 51:49 percent ratio to each other. The WGOA trawl CV sector is allocated 27.7 percent of the annual WGOA Pacific cod TAC in the A season TAC and 10.7 percent of the annual WGOA Pacific cod TAC in the B season, which results in a 72:28 percent seasonal ratio. The WGOA trawl CVs receive a relatively greater proportion of their annual Pacific cod TAC allocation in the A season, as they do not target Pacific cod in the fall (B season). The sectors that receive a small percentage of the annual
Regulations at § 679.20(a)(12)(ii) describe the reallocation of sector allocations “if [. . . NMFS] determines that a sector will be unable to harvest the entire amount of Pacific cod allocated to [a] sector.” NMFS publishes these reallocations as inseason actions in the
This proposed rule addresses concerns that arose from a series of discussion papers that were presented to the Council in 2017, 2018, and 2019. The discussion papers examined the amount of uncaught Pacific cod TAC in all gear sectors during the WGOA and CGOA B season, options for changing WGOA and CGOA pollock and Pacific cod seasonal allocations with the goal of improving efficiency in fishery management, and whether delaying the start of the WGOA and CGOA pollock C season from August 25 to September 1 might provide operational benefits to vessels and processors that also engage in salmon fisheries or groundfish fisheries outside of the GOA.
For the pollock fishery, status quo management can result in time gaps between the A and B seasons and between the C and D seasons. The time gaps vary in length depending on the pace of fishing and TAC utilization during the A and C seasons. Table 4-8 in Section 4.5.1.2 of the Analysis shows instances where fisheries were closed for up to 80 percent of a season when the pollock TAC was taken quickly. In other cases, NMFS has closed directed fishing for pollock toward the very end of one season, and before another season has started, resulting in closures that lasted as little as one day. For example, NMFS has closed the pollock C season during the final four days of the season in management areas 610 and 630 on five occasions from 2012 through 2017.
The Council and NMFS acknowledge that these time gaps between seasons create operational inefficiencies and increase costs compared to a continuous fishery. For harvesters, operational inefficiencies could include fuel costs to transit back and forth to fishing grounds, lost labor productivity (
In recommending regulatory changes for the WGOA and CGOA pollock fishery, the Council also sought to address a concern about the amount of pollock TAC that may go unharvested in a season because of existing restrictions on TAC rollover. As described above, regulations at § 679.20(a)(5)(iv)(B) state that unharvested pollock in one season may be added to a subsequent seasonal allocation provided that the revised seasonal apportionment does not exceed 20 percent of the subsequent season's pollock apportionment for the management area (see Section 2.1.1 in the Analysis for more detail on rollover allocation procedures). The rollover limits are intended to prevent the concentration of annual fishing activity in a given time and space so that it does not adversely affect Steller sea lions (see Section 3.4 in the Analysis for more detail on effects to Steller sea lions). Because only a low percentage of a seasonal apportionment can be rolled over to the following season, the cap on rollovers can result in unharvested TAC that cannot be caught in the subsequent season. Because the 20 percent rollover cap must be “filled” for the next season in the area where an underharvest occurred before additional TAC may be allocated to other areas, rollover between areas is less frequent but not uncommon. In cases of severely underharvested seasonal apportionments, rollover caps can result in a situation where all areas receive the maximum possible apportionment for the following season, but an amount still remains that cannot be reallocated and is thus not available to be fished. The Council determined, and NMFS agrees, that combining the A/B and C/D pollock seasons better addresses the purpose and need for the proposed action than increasing the amount of pollock that can be rolled over to subsequent seasons.
As described in Section 2.2 of the Analysis, options considered under Alternative 2 included increasing the amount of unharvested pollock that may be reallocated from one season to the following season from 20 percent (status quo) to either 25 percent (sub-option 1) or 30 percent (sub-option 2). The Council's recommendation to maintain the 20 percent rollover cap was responsive to public testimony that underharvest in one season might continue into the following season, especially if the underharvest is due to poor fishing conditions in the underharvested area. As such, a higher rollover cap might increase the possibility of leaving fish stranded because TAC cannot be rolled over to other areas. This is further explained in Section 4.6.3 of the Analysis.
In addition, this proposed rule would delay the start of the redesignated pollock B season from August 25 to September 1 to provide operational benefits to vessels and processors that also engage in salmon fisheries or
To address concerns related to management inefficiencies in the GOA pollock fishery, the Council recommended, and NMFS proposes, regulations that would (1) combine the A and B season into a single season (redesignated as the A season), combine the C and D season into a single season (redesignated as the B season), and allocate pollock among the redesignated A season and redesignated B season at 50 percent to the A season and 50 percent to the B season, applicable to management areas 610, 620, and 630; and (2) change the start date of the redesignated B pollock season in the GOA from August 25 to September 1, resulting in a redesignated B season that runs from September 1 to November 1.
In recent years, trawl CVs in the GOA Pacific cod fishery only conduct directed fishing for B season Pacific cod in the CGOA. The WGOA trawl CV sector receives 10.7 percent of the total annual WGOA Pacific cod TAC in the B season (see Table 2-2 in the Analysis), but it goes largely unharvested by trawl vessels except as incidental catch during the C and D seasons in the pollock trawl fishery. In the CGOA, where the trawl CV fishery is prosecuted, harvest of Pacific cod in the B season lags A season harvest by a significant margin in percentage terms. Table 3-4 in the Analysis shows that harvest of CGOA B season Pacific cod TAC was typically below 50 percent and began to fall precipitously in the years leading up to the 2018 reduction in ABC. While industry participants have reported that fish size and flesh quality can be better in the fall B season than in the late-winter A season due to the length of time removed from spawning activity, GOA Pacific cod do not tend to aggregate in the fall in a manner that lends itself to efficient harvest with trawl gear. As a result, a significant portion of the GOA Pacific cod B season TAC is left unharvested by trawl CVs, while the A season TAC is more fully prosecuted by trawl CVs.
The Council acknowledged the changes that have occured in the B season Pacific cod fishery, resulting in unharvested Pacific TAC. To address this concern, the Council recommended Amendment 109 for Pacific cod fisheries in the GOA. Proposed regulations to implement Amendment 109 would increase trawl CV allocations of Pacific cod TAC in the CGOA and WGOA during the A season while proportionally decreasing trawl CV allocations of Pacific cod TAC in the CGOA and WGOA during the B season. Specifically, 25.29364 percent of the annual CGOA Pacific cod TAC would be allocated to the trawl CV sector during the A season and 16.29047 percent would be allocated to the B season. Additionally, 31.54 percent of the annual WGOA Pacific cod TAC would be allocated to the trawl CV sector during the A season and 6.86 percent would be allocated to the B season.
Options considered under Alternative 3 explored shifting Pacific cod TAC from the B season to the A season in 5 percent increments relative to status quo. For example, the CGOA trawl CV sector is currently allocated 21.14 percent of the total CGOA A season TAC and 20.45 percent of the total CGOA B season TAC. Those two figures are at a 51:49 percent ratio to each other. Option 1 sought a 5 percent change in relation to the status quo ratio or, in other words, a 56:44 percent ratio. Option 2 results in a 61:39 percent ratio for CGOA trawl CVs, and Option 3 would have resulted in a 66:34 percent ratio. The same method applied to the WGOA trawl CV sector (see Section 2.3 in the Analysis for more detail).
The Council's recommendation of Alternative 3 Option 2 strikes a balance between responding to the purpose and need and considering effects to marine mammals. The Pacific cod seasons were initially established to mitigate concerns surrounding prey availability for Steller sea lions. While the Council concluded that shifting a small amount of TAC from the B season to the A season meets its purpose and need for action, the Council stated that a precautionary approach is prudent given the potential effects on Steller sea lions (See Section 3.4.2 of the Analysis).
In adopting its preferred alternatives, the Council considered effects of the proposed action on Steller sea lions. For the CGOA and WGOA pollock trawl fishery, Section 4.6.2 of the Analysis explains that various factors affect pollock harvest patterns, including but not limited to fish aggregation and quality (roe content), market availability, encounter rates with PSC-limited species, high and low TAC years for pollock, economic opportunities in—or trade-offs with—other fisheries, and other individual vessel business decisions. These factors can be difficult to predict with accuracy, with respect to this action, at this time. Additionally, many constraints that dictate the timing and pace of the pollock fishery would remain, even if seasons were combined and the fleet had more available TAC at any given moment with which to optimize its fishing. Those constraints would be expected to prevent harvest patterns from changing in a significantly different manner under the proposed rule than seen in the past.
Finally, changing the start of the combined C/D season from August 25 to September 1 would not change anticipated effects to the pollock stock (as noted in Section 3.2.3 of the Analysis), and therefore does not change anticipated impacts to prey availability for Steller sea lions.
For the Pacific cod fishery in the CGOA and WGOA, the overall proposed change in seasonal allocation across all sectors combined is a modest 4 percent from the B season to the A season. This modest shift in seasonal allocation is not expected to result in an increase in vessel participation, nor a change in the spatial distribution of the fishing vessels (as noted in Section 4.6.4. of the Analysis).
For the reasons outlined above, the Council and NFMS do not expect the implementation of Amendment 109 to result in discernable spatial harvest concentration or a decrease in temporal dispersion of harvest which would significantly affect prey availability for Steller sea lions.
In recommending Amendment 109, the Council has chosen a portion of each action alternative for each of the GOA CV pollock and Pacific cod fisheries. This blended action will provide the greatest improvements to operational and management efficiency of all the alternatives while not re-distributing allocations of pollock or Pacific cod between management areas or among participants, which is a stated objective in the purpose and need for this action.
This proposed rule would revise § 679.20(a)(5)(iv)(B) to combine the GOA Western and Central regulatory areas' pollock A and B seasons into a single season (redesignated as the A season) and combine C and D seasons into a single season (redesignated as the B season). This proposed rule also would apportion 50 percent of the CGOA and WGOA pollock TAC to the
This proposed rule would revise § 679.23(d)(2) to change the dates of the redesignated A season as January 20 through May 31 and the dates of the redesignated B season as September 1 through November 1. This proposed revision effectively leaves the duration of the redesignated A season unchanged from the duration of the current A and B seasons, but shortens the duration of the redesignated B season (September 1 to November 1) from the duration of the current C and D seasons (August 25 to November 1).
This proposed rule would revise § 679.20(a)(12)(i) to specify the new seasonal apportionments of Pacific cod TAC for the CV trawl sectors in the CGOA and the WGOA. Although the overall ratio of A and B seasonal apportionments of Pacific cod for the trawl CV sector would be changed, this proposed rule would not affect the seasonal apportionments of Pacific cod to any of the other sectors. The seasonal apportionment of Pacific cod will remain unchanged for all other sectors in the CGOA and the WGOA.
This proposed rule would also revise the tables at § 679.20(a)(12)(i)(A) and (B) to change the seasonal allowance of Pacific cod for trawl CVs in the WGOA and the CGOA. For both the CGOA and the WGOA, the A season allowance would increase by approximately 4 percent while the B season allowance would decrease by approximately 4 percent.
Pursuant to §§ 304(b)(1)(A) and 305(d) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this proposed rule is consistent with the Council's regulatory amendment for GOA pollock, Amendment 109 to the GOA FMP, other provisions of the Magnuson-Stevens Act, and other applicable law, subject to further consideration of comments received during the public comment period.
This proposed rule has been determined to be not significant for the purposes of Executive Order 12866.
This proposed rule is not an Executive Order 13771 regulatory action because this rule is not significant under Executive Order 12866.
An RIR was prepared to assess the costs and benefits of available regulatory alternatives. A copy of this analysis is available from NMFS (see
The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration (SBA) that this proposed rule, if adopted, would not have a significant economic impact on a substantial number of small entities. The factual basis for this determination is as follows.
This proposed rule would directly regulate the owners and operators of certain trawl CVs that target GOA pollock and Pacific cod. Under the Regulatory Flexibility Act (RFA), businesses classified as primarily engaged in commercial fishing are considered small entities if they have combined annual gross receipts not in excess of $11.0 million for all affiliated operations worldwide, regardless of the type of fishing operation—
In 2017, the most recent year for which ex-vessel revenue data are available, 68 CVs participated in GOA pollock or Pacific cod trawl fisheries. Of those, 32 are classified as small entities based on individual vessel revenue. The remaining 36 vessels would be considered small entities based only on their individual vessel revenue. However, analysis of directly regulated entity revenue to determine entity size as measured against the commercial fishing threshold of $11.0 million must also consider ownership affiliations and other contractual affiliations of the entities, worldwide. Of these 36 participating vessels, 16 are affiliated with other vessels and their operating entities via affiliations with Central GOA Rockfish Program cooperatives. Additionally, the remaining 20 vessel operations are affiliated via American Fisheries Act cooperatives. Thus these 36 operating entities are not considered small entities for RFA purposes. There are also 43 inactive licenses that lack any recent associated revenue history and the owners of these licenses are considered potentially directly regulated small entities.
The general purpose of this action, as identified in the RIR, is to enhance the operational and management efficiency of the GOA pollock and Pacific cod trawl fisheries with the goal of improving efficiency in fishery management and prosecution while providing additional value from the fishery by allowing participants to focus effort when target groundfish species are available and of high product quality. The RIR determined that this action would provide harvesters and processors that prosecute GOA pollock with flexibility to maximize yield by fishing when the resource is most available and productive (
Alaska, Fisheries, Reporting and recordkeeping requirements.
For reasons set out in the preamble, 50 CFR part 679 is proposed to be amended as follows:
16 U.S.C. 773
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Commodity Credit Corporation and the Rural Business Cooperative Service, USDA.
Notice.
The Commodity Credit Corporation (CCC) and the Rural Business-Cooperative Service (RBCS), a Rural Development agency of the United States Department of Agriculture (USDA), intend to announce in a Notice of Funding Availability (NOFA) the availability of up to $100 million in competitive grants to eligible entities for activities designed to expand the sales and use of renewable fuels under the Higher Blends Infrastructure Incentive Program (HBIIP). The purpose of this notice is to alert prospective participants and stakeholders of the Agencies' intentions to jointly publish a NOFA by mid-spring which will provide specific program information and requirements.
Anthony Crooks: telephone (202)205-9322, email:
The overall goal of HBIIP is to increase the sales and use of higher blends of ethanol and biodiesel. HBIIP is intended to encourage a more comprehensive approach to marketing higher blend levels by sharing the costs related to and/or offering sales incentives for the installation of fuel pumps, related equipment, and infrastructure.
Under the HBIIP, funds will be made directly available to assist transportation fueling and biodiesel distribution facilities with converting to higher ethanol and biodiesel blend friendly status by sharing the costs related to and/or offering sales incentives for the installation of fuel pumps, related equipment, and infrastructure. Cost-share grants and/or incentives will be made available for higher fuel ethanol/biodiesel blends such as “E15” and “B20” (or higher), at vehicle fueling locations, including, but not limited to, local fueling stations, convenience stores (CS), hypermarket fueling stations (HFS), and/or fleet facilities.
The Commodity Credit Corporation (CCC) is an agency and instrumentality of the United States within the Department of Agriculture and operates under the supervision of the Secretary of Agriculture. Among the activities that section 5 of the CCC Charter Act authorizes CCC to undertake are actions to:
• Make available materials and facilities required in connection with the production and marketing of agricultural commodities (other than tobacco) and
• Increase the domestic consumption of agricultural commodities (other than tobacco) by expanding or aiding in the expansion of domestic markets or by developing or aiding in the development of new and additional markets, marketing facilities, and uses for such commodities.
Under this authority, CCC will make available up to $100 million in the form of grants and/or sales incentives to eligible entities to assist with the implementation of activities to expand the infrastructure for renewable fuels derived from agricultural products produced in the United States. HBIIP will be administered under the general supervision of RBCS.
Applicants may enter into arrangements with private entities such as, but not limited to, commercial vendors of fuels, agricultural commodity promotional organizations, Tribes, and other entities interested in the renewable fuels in order to secure such non-Federal funds or in-kind contributions.
Funds made available under HBIIP may only be used for infrastructure to support higher biofuel blend sales and use.
Transportation fueling and biodiesel distribution facilities may apply for this program. Eligible entities would include: Retail fueling stations, convenience stores, hypermarket fueling stations, fleet facilities, and similar entities with equivalent capital investments. Consideration will also be given to biodiesel terminal operations and home heating oil distribution centers or equivalent entities.
The following information provides a general overview of the requirements for eligible applications. Application requirements and other important information will be provided in the forthcoming NOFA and on the HBIIP web page
Applicants will certify and demonstrate that any required matching funds are available during the grant period and provide appropriate documentation with the application.
There are a number of existing or prior and ongoing State-led programs and private sector efforts to help provide funding for higher blend infrastructure. These programs may be included as part of any matching contribution requirement. However, the application must show how the HBIIP grant will add to the infrastructure that fosters biofuel sales and use. HBIIP funds are intended to provide additional incentives.
• Spent on eligible expenses during the grant period.
• From eligible sources.
• Spent in advance or as a pro-rata portion of grant funds being spent.
• Provided either by the applicant or a third party in the form of cash or an eligible in-kind contribution.
• Employee's and/or member's time.
• Other Federal grant funds unless provided by authorizing legislation.
• Cash or in-kind contributions donated outside the grant period.
• Over-valued in-kind contributions.
Only one application may be submitted per applicant. However, an application may include proposed investments for more than one location.
An application must include no more than a one-year grant period, or it will not be considered for funding.
USDA will evaluate how the applications will increase the sale and use of fuel using the evaluation criteria specified in the NOFA and
Each application will be reviewed to determine whether the applicant is eligible and whether the application is complete and sufficiently responsive to the requirements specified in the NOFA.
Applications will be evaluated using the Priority Scoring Criteria listed in the NOFA. Evaluators will base scores only on the information provided or cross-referenced by page number in each individual evaluation criterion.
Applicants must be registered in the System for Award Management (SAM) prior to submitting an application; which can be obtained at no cost via a toll-free request line at (866) 705-5711 or online at
All applicants except those that are individuals, in accordance with 2 CFR part 25, must have a DUNS number, which can be obtained at no cost via a toll-free request line at (866) 705-5711 or online at
To use
Rural Business-Cooperative Service, Rural Housing Service, and Rural Utilities Service, USDA.
Notice.
Section 6401 of the Agricultural Act of 2018 (2018 Farm Bill) enables the Secretary of Agriculture to provide priority to projects that support Strategic Economic and Community Investment plans. The 2018 Farm Bill re-authorized the Strategic Economic and Community Development (SECD) priority, Section 6025 of the Agricultural Act of 2014 (2014 Farm Bill) with some modifications. Until the rulemaking process is finalized to incorporate the new changes, SECD will continue to operate using the existing regulation. In FY 2020, the Agency implements SECD through reserving funds from the “underlying programs”. This Notice applies to applicants who will be submitting applications for the “underlying programs”. This notice establishes the above mentioned priority effective upon the publication of this notice.
To apply for SECD priority points in FY 2020, applicants must submit Form RD 1980-88, “Strategic Economic and Community Development (section 6025) Priority,” by 5:00 p.m. Eastern Time on June 30, 2020.
All applicants are responsible for any additional expenses incurred in preparing and submitting applications.
Submit applications to the USDA Rural Development Area Office servicing the area where the project is located. A list of the USDA Rural Development Area Offices can be found listed by state at:
For more information, please contact your respective Rural Development State Office listed here:
For all other inquiries, contact Innovation Center Partnership Division Regional Coordinators as follows:
• Midwest Region—Christine Sorensen: 202-568-9832,
• Northeast Region—Angela Callie: 202 568 9738,
• Southern Region—Greg Dale: (870) 633-3055 Ext. 123,
• Western Region—Tim O'Connell: (503) 414-3396,
• National Office— Greg Batson, Rural Development Innovation Center, U.S. Department of Agriculture, Stop 0793, 1400 Independence Avenue SW, Washington, DC 20250-0783, Telephone: 573-239-2945. Email:
This action has been reviewed and determined not to be a rule or regulation as defined in Executive Order 12866, as amended by Executive Order 13258.
Section 6401 of the 2018 Farm Bill re-authorized Section 6025 of the Agricultural Act of 2014 (2014 Farm Bill) with some modifications. The provision provides priority to projects that support strategic economic development or community investment plans when applying for program funds under the rural development mission area. Until the rulemaking process is finalized to incorporate the new changes, SECD will continue to operate using the existing regulation. In FY 2020, the Agency will reserve funds from the “underlying programs”, using SECD regulation 7 CFR 1980, Subpart K. This Notice provides applicants with
This priority is authorized under Section 6401 of the 2018 Farm Bill.
Section 6401 of the 2018 Farm Bill authorizes any program under the Consolidated Farm and Rural Development Act (7 U.S.C. 2008v), as determined by the Secretary, to give priority to an application that supports the implementation of strategic community investment plans. In FY 2020, the Agency implements SECD through reserving funds from the “underlying programs”, using SECD regulation 7 CFR 1980, Subpart K.
Accordingly, the Agency is giving regional planning priority through the following Rural Development programs:
For FY 2020 applications, the following table specifies the percentage of funds being reserved:
To be considered for SECD priority points, both the applicant and project must meet the eligibility requirements of the underlying program. These requirements vary among the underlying programs and applicants should refer to the regulations for those programs, which are referenced in I. A. of this Notice.
The agency continues to make available additional priority for regional planning through the existing regulation without making any changes to the applicant eligibility requirements of the underlying programs. The regulation includes three criteria that a project must meet in order to be considered for priority points (see 7 CFR 1980.1010):
The first criterion, as noted above, is that the project meets the applicable eligibility requirements of the underlying program for which the applicant is applying.
The second criterion is that the project is “carried out in a rural area” as defined in 7 CFR 1980.1005. As defined, this means either the entire project is physically located in a rural area or all of the beneficiaries of the service(s) provided through the project must either reside in or be located in a rural area. Note that the definition of “rural” varies among the underlying programs and the Section 6025 regulation does not change those definitions, therefore, the applicable program regulations as outlined in I.A. should be reviewed as necessary.
The third criterion is that the project supports the implementation of a strategic economic development or community investment plan on a multi-jurisdictional basis as defined in 7 CFR 1980.1005.
In order to be considered for the reserved funds from underlying programs in FY 2020, applicants (1) meet all requirements of the underlying program; (2) meet all requirements in accordance with 7 CFR Subpart K (see 7 CFR 1980.1010); and (3) submit Form RD 1980-88 and supporting documentation. Form RD 1980-88 requests such information as (see 7 CFR 1980.1015):
• Identification of whether the applicant includes a State, county, municipal, or tribal government;
• Identification by name of the plan being supported by the project, the date the plan became effective and is to remain in effect, and a detailed description of how the project directly supports one or more of the plan's objectives;
• Sufficient information to show that the project will be carried out solely in a rural area; and
• Identification of any current or previous applications the applicant has submitted for funds from the underlying programs.
Any and all cost sharing, matching, and cost participation requirements of the applicable underlying program apply to projects seeking SECD priority points. The Section 6025 regulation does not change such requirements.
Any and all other eligibility requirements (beyond those identified in III.A of this Notice) found in the
All FY 2020 applications for underlying programs will be reviewed, evaluated, and scored based on the underlying program's scoring criteria. This Notice does not affect that process. This Notice only affects the scoring of SECD applications competing for an underlying program's funds.
All eligible and complete applications competing for an underlying program's funds will be evaluated and scored based on the criteria of the applicable underlying program, whether or not the applicant seeks regional planning priority points.
For applicants wishing to be considered for the reserved funds in FY 2020, the Agency will review, evaluate, and score each Form RD 1980-88, based on the criteria specified in 7 CFR 1980.1020, to award the SECD priority points.
The Agency will select the highest scoring applications competing for an underlying program's funds based on the award process for the underlying program to determine which projects receive funds except that:
• An application's total score will be determined in accordance with section IV.A. of this Notice and
• To the extent provided by the underlying programs in this Notice, the Agency will encourage awarding “SECD priority” to qualifying applications.
The Agency will notify SECD applicants who receive funding in a manner consistent with award notifications for the underlying program.
Any and all additional requirements of the applicable underlying programs apply to projects receiving funding in response to this Notice. Please see the regulations for the applicable underlying program.
Any and all post-award reporting requirements contained in the underlying program apply to all projects receiving funding in response to this Notice.
Applicants who are selected for funding in FY 2020 in response to this Notice (
In accordance with the Paperwork Reduction Act of 1995, the information collection requirements contained in 7 CFR part 1980, subpart K, have been approved by OMB under OMB Control Number 0570-0068.
This document has been reviewed in accordance with 7 CFR part 1970, subpart A, “Environmental Policies.” It is the determination of the Agency that this action does not constitute a major Federal action significantly affecting the quality of the human environment, and, in accordance with the National Environmental Policy Act of 1969, Public Law 91-190, neither an Environmental Assessment nor an Environmental Impact Statement is required.
All applicants, in accordance with 2 CFR part 25, must have a DUNS number, which can be obtained at no cost via a toll-free request line at 1-866-705-5711 or online at
In accordance with Federal civil rights law and U.S. Department of Agriculture (USDA) civil rights regulations and policies, the USDA, its Agencies, offices, and employees, and institutions participating in or administering USDA programs are prohibited from discriminating based on race, color, national origin, religion, sex, gender identity (including gender expression), sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted or funded by USDA (not all bases apply to all programs). Remedies and complaint filing deadlines vary by program or incident.
Persons with disabilities who require alternative means of communication for program information (
To file a program discrimination complaint, complete the USDA Program Discrimination Complaint Form, AD-3027, found online at
(1)
Architectural and Transportation Barriers Compliance Board.
Notice of guidance documents.
We, the Architectural and Transportation Barriers Compliance Board (hereafter, “Access Board,” “Board,” or “we”), are issuing this notice to announce that, pursuant to Executive Order 13891, we have collected and listed all of our guidance documents on our website which can be found at
Christopher Kuczynski, (202) 272-0042,
Executive Order 13891 requires each agency to establish on its website “a single, searchable, indexed database that contains or links all guidance documents in effect.” (84 FR 55235, Oct. 9, 2019). In response, the Access Board has identified all of its guidance documents and co-located them at
The Access Board is a small, independent federal agency dedicated to promoting equality for people with disabilities through, among other things, developing and maintaining accessibility guidelines under the Americans with Disabilities Act (ADA) and the Architectural Barriers Act (ABA). Under titles II and III of the ADA, the Board develops and maintains accessibility guidelines for buildings, facilities, and transit vehicles.
The Board also issues standards and guidelines under Section 508 of the Rehabilitation Act, 29 U.S.C. 794d, and Section 255 of the Communications Act. Section 508 requires that information and communication technology (ICT) purchased, maintained, or used by the federal government be readily accessible to, and usable by, individuals with disabilities. Section 255 of the Communication Act, 47 U.S.C. 255, requires that telecommunications services and equipment be accessible to, and usable by, individuals with disabilities where readily achievable.
The guidance documents listed on the Board's website are divided into seven separate categories.
These guidance documents, while listed separately, together make up a single guide to the ADA Standards. The guide is divided by chapters that correspond to the applicable Chapters in the ADA Standards. In the beginning of the Guide to the ADA Accessibility Standards, the Board notes that it “explains requirements in the current editions of the ADA Standards issued by the DOJ and DOT. It was developed by the U.S. Access Board in cooperation with DOJ and DOT. It is important to use this guide along with a complete copy of the ADA Standards as it explains, but does not contain or reprint, the text of the ADA Standards.”
This document is similar to the guide on the ADA Standards in that it is divided into multiple chapters that correspond to the chapters of the ABA Standards. Similarly, this guide explains current editions of the ABA Standards issued by the Department of Defense, the General Services Administration, and the U.S. Postal Service, which are based on, and are substantively similar to, the Board's updated ABA Accessibility Guidelines (2004).”
The Access Board has created multiple short animations which provide a visual and audible illustration of sections of the ADA and ABA Standards. These animations follow the same structure of the guides on the ADA and ABA Standards in that they explain requirements in the standards and provide best practices but do not establish any new or additional requirements above what is specified in the standards.
This guide provides technical assistance, background, and rationale for the ADA Accessibility Guidelines for Transportation Vehicles, 36 CFR part 1192, and gives examples of how the accessibility guidelines can be applied in particular cases.
These older guidance documents provide technical assistance on the implementation of the original standards issued under Section 508 of the Rehabilitation Act. While the Board has updated these standards recently, we maintain this guide as there is still legacy ICT to which the Original 508 Standards are applicable. 36 CFR part 1194, Appendix D.
This section includes multiple documents and videos that provide technical assistance on providing access to public streets and sidewalks and other elements of public rights-of-way. These materials clearly state that they are only intended to provide technical assistance and are not binding as the public rights-of-way rulemaking has not been completed.
This is advisory guidance on making prescription drug container labels accessible to people who are blind, visually impaired, or elderly. Section 904 of the Food and Drug Administration and Innovation Act (Pub. L. 112-144, 126 Stat. 993) charged the Access Board with convening a working group to develop best practices for making information on prescription drug container labels accessible. However, these best practices are not mandatory and are not standards or accessibility guidelines of the Access Board.
United States.
Notice of Commission subcommittee meeting.
Wednesday March 3, 2020, 12:00-1:30 p.m. ET.
Meeting to take place by telephone.
This business meeting is open to the public by telephone only: 1-800-353-6461, Conference ID 337-1130. Persons with disabilities who are requesting an accommodation for the call should contact Pamela Dunston at (202) 376-8105 or at
United States Commission on Civil Rights.
Notice of Commission subcommittee meeting.
Wednesday March 4, 2020, 1:00-2:30 p.m. ET.
Meeting to take place by telephone.
This business meeting is open to the public by telephone only: 1-800-353-6461, Conference ID 601-0676. Persons with disabilities who are requesting an accommodation for the call should contact Pamela Dunston at (202) 376-8105 or at
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Pursuant to the Enforce and Protect Act of 2015 (EAPA), the Department of Commerce (Commerce) received a covered merchandise referral from U.S. Customs and Border Protection (CBP) in connection with a CBP EAPA investigation concerning the antidumping duty order on diamond sawblades and parts thereof (diamond sawblades) from the People's Republic of China (China). In accordance with EAPA, Commerce intends to determine whether the merchandise subject to the referral is covered by the scope of this order and promptly transmit its determination to CBP. Commerce is providing notice of the referral and inviting participation from interested parties.
Applicable February 28, 2020.
Yang Jin Chun, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230, telephone: (202) 482-5760.
On February 24, 2016, the Trade Facilitation and Trade Enforcement Act of 2015 was signed into law, which contains Title IV—Prevention of Evasion of Antidumping and Countervailing Duty Orders (short title “Enforce and Protect Act of 2015” or “EAPA”) (Pub. L. 114-125, 130 Stat. 122, 155, Feb. 24, 2016). Effective August 22, 2016, section 421 of the EAPA added section 517 to the Tariff Act of 1930, as amended (the Act), which establishes a formal process for CBP to investigate allegations of the evasion of antidumping duty and/or countervailing duty orders. Section 517(b)(4)(A) of the Act provides that if, during the course of an EAPA investigation, CBP is unable to determine whether the merchandise at issue is covered merchandise within the meaning of section 517(a)(3) of the Act, it shall refer the matter to Commerce to make such a determination. Section 517(a)(3) of the Act defines covered merchandise as merchandise that is subject to an antidumping duty order issued under section 736 of the Act or a countervailing duty order issued under section 706 of the Act. Section 517(b)(4)(B) of the Act states that Commerce, after receiving a covered merchandise referral from CBP, shall determine whether the merchandise is covered merchandise and promptly transmit its determination to CBP. The Act does not establish a deadline within which Commerce must issue its determination.
On December 17, 2019, Commerce received a covered merchandise referral from CBP regarding CBP EAPA Investigation No. 7354,
CBP requested and obtained information from Gogo. CBP has requested that Commerce issue a determination as to whether the following categories of diamond
On February 20, 2020, Commerce published the affirmative final determination of the anti-circumvention inquiry on the antidumping duty order on diamond sawblades from China.
In accordance with 19 CFR 351.225(b), Commerce is hereby notifying interested parties that it has received the covered merchandise referral referenced above and will begin a new segment of the proceeding by initiating a scope inquiry concerning the merchandise covered under all categories and exported through either one of the two channels, with the exception of Category 1 exported through Channel 1, which is covered by the
Additionally, Commerce intends to provide interested parties with the opportunity to participate in this segment of the proceeding, including through the submission of comments, and, if appropriate, new factual information and verification. Specifically, Commerce will notify parties on the segment-specific service list for this segment of the proceeding of a schedule for comments. In addition, Commerce may request factual information from any party to assist in making its determination, including soliciting information directly from Protech and Gogo to conduct our analysis, and may verify submissions of factual information, if Commerce determines that such verification is appropriate. Commerce intends to issue a final determination within 120 days of the publication of this notice (this deadline may be extended if it is not practicable to complete the final determination within 120 days) and will promptly transmit its final determination to CBP, in accordance with section 517(b)(4)(B) of the Act.
Commerce may consider conducting a separate anti-circumvention inquiry regarding the merchandise described in CBP's covered merchandise referral, with the exception of the merchandise already determined to have been circumventing the order in the
Interested parties that wish to participate in the scope inquiry being initiated now, and receive notice of the final determination, must submit their letters of appearance as discussed below. Further, any party desiring access to business proprietary information in this segment of the proceeding must file an application for access to business proprietary information under administrative protective order (APO), as discussed below.
Finally, we note that scope inquiries initiated in response to a CBP covered merchandise referral are a new type of proceeding at Commerce.
For a complete description of the scope of the order,
All submissions to Commerce must be filed electronically using ACCESS.
Interested parties that wish to participate in this segment of the proceeding and be added to the public service list for this segment of the proceeding must file a letter of appearance in accordance with 19 CFR 351.103(d)(1), with one exception: The parties publicly identified by CBP in the covered merchandise referral (referenced above) are not required to submit a letter of appearance, and will be added to the public service list for this segment of the proceeding by Commerce.
Within 24 hours of this notice being signed, Commerce placed a request for an APO segment on the record
Interested parties must submit applications for disclosure under the APO in accordance with the procedures outlined in Commerce's regulations at 19 CFR 351.305. Those procedures apply to this segment of the proceeding, with one exception: APO applicants representing the parties that have been
The products covered by the order are all finished circular sawblades, whether slotted or not, with a working part that is comprised of a diamond segment or segments, and parts thereof, regardless of specification or size, except as specifically excluded below. Within the scope of the order are semi-finished diamond sawblades, including diamond sawblade cores and diamond sawblade segments. Diamond sawblade cores are circular steel plates, whether or not attached to non-steel plates, with slots. Diamond sawblade cores are manufactured principally, but not exclusively, from alloy steel. A diamond sawblade segment consists of a mixture of diamonds (whether natural or synthetic, and regardless of the quantity of diamonds) and metal powders (including, but not limited to, iron, cobalt, nickel, tungsten carbide) that are formed together into a solid shape (from generally, but not limited to, a heating and pressing process).
Sawblades with diamonds directly attached to the core with a resin or electroplated bond, which thereby do not contain a diamond segment, are not included within the scope of the order. Diamond sawblades and/or sawblade cores with a thickness of less than 0.025 inches, or with a thickness greater than 1.1 inches, are excluded from the scope of the order. Circular steel plates that have a cutting edge of non-diamond material, such as external teeth that protrude from the outer diameter of the plate, whether or not finished, are excluded from the scope of the order. Diamond sawblade cores with a Rockwell C hardness of less than 25 are excluded from the scope of the order. Diamond sawblades and/or diamond segment(s) with diamonds that predominantly have a mesh size number greater than 240 (such as 250 or 260) are excluded from the scope of the order.
Merchandise subject to the order is typically imported under heading 8202.39.00.00 of the Harmonized Tariff Schedule of the United States (HTSUS). When packaged together as a set for retail sale with an item that is separately classified under headings 8202 to 8205 of the HTSUS, diamond sawblades or parts thereof may be imported under heading 8206.00.00.00 of the HTSUS. On October 11, 2011, Commerce included the 6804.21.00.00 HTSUS classification number to the customs case reference file, pursuant to a request by U.S. Customs and Border Protection.
The tariff classification is provided for convenience and customs purposes; however, the written description of the scope of the order is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that wooden cabinets and vanities and components thereof (wooden cabinets and vanities) from the People's Republic of China (China) are being, or are likely to be, sold in the United States at less than fair value (LTFV). The final weighted-average dumping margins are listed in the “Final Determination Margins” section of this notice.
Applicable February 28, 2020.
Kabir Archuletta, Rachel Greenberg, or Eliza Siordia, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-2593, (202) 482-0652, or (202) 482-3878, respectively.
On October 9, 2019, Commerce published the
A summary of the events that occurred since Commerce published the
The period of investigation is July 1, 2018 through December 31, 2018.
The scope of the investigation covers wooden cabinets and vanities from China. For a complete description of the scope of the investigation,
On October 2, 2019, Commerce issued a Preliminary Scope Decision
All issues raised in the case and rebuttal briefs by parties in this investigation are discussed in the Issues and Decision Memorandum. A list of the issues that parties raised in the Issues and Decision Memorandum is attached to this notice as Appendix II.
As provided in section 782(i) of the Tariff Act of 1930, as amended (the Act), Commerce conducted verification of the information submitted by Ancientree and Foremost for use in the final determination. We used standard verification procedures, including an examination of relevant accounting records and original source documents provided by the respondents.
Based on our review and analysis of the comments received from parties, minor corrections presented at verification, and our verification findings, we have made certain changes to the margin calculations for Ancientree and Foremost. For a discussion of these changes,
In determining Meisen's dumping margin, we find that the application of facts available with an adverse inference is appropriate under sections 776(a)(2)(A) through (C) and 776(b) of the Act as discussed in the Issues and Decision Memorandum.
For the reasons explained in the
Generally, Commerce looks to section 735(c)(5)(A) of the Act, which provides instructions for calculating the all-others rate in a market economy antidumping duty (AD) investigation, for guidance when calculating the rate for separate rate respondents that we did not individually examine in a non-market economy AD investigation. Section 735(c)(5)(A) of the Act states that the estimated all-others rate shall be an amount equal to the weighted average of the estimated weighted average dumping margins established for exporters and producers individually investigated, excluding any zero and
In this final determination, Commerce has calculated rates for Ancientree and Foremost that are not zero,
The final estimated weighted-average dumping margins are as follows:
We intend
In accordance with section 735(c)(1)(B) of the Act, we will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all entries of wooden cabinets and vanities from China, as described in the “Scope of the Investigation” section, entered, or withdrawn from warehouse, for consumption on or after October 9, 2019, the date of publication of the
Pursuant to section 735(c)(1)(B)(ii) of the Act, Commerce will instruct CBP to require a cash deposit
We normally adjust AD cash deposit rates by the amount of export subsidies, where appropriate. In the companion countervailing duty (CVD) investigation, with respect to the mandatory respondents individually examined in the CVD investigation, and the separate-rate companies, we find that an export subsidy adjustment of 10.54 percent to the cash deposit rate is warranted because this is the export subsidy rate included in the CVD all-others rate to which the separate-rate companies are subject. As part of our determination in this final determination to apply AFA the China-wide entity, Commerce has adjusted the China-wide entity's AD cash deposit rate by the lowest export subsidy rate determined for any party in the companion CVD proceeding,
Pursuant to section 777A(f) of the Act, we normally adjust cash deposit rates for estimated domestic subsidy pass-through, where appropriate. However, in this case there is no basis to grant a domestic subsidy pass-through adjustment.
In accordance with section 735(d) of the Act, we notified the International Trade Commission (ITC) of the final affirmative determination of sales at LTFV. As Commerce's final determination is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will determine, within 45 days, whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of wooden cabinets and vanities for sale from China, or sales (or the likelihood of sales) for importation, of wooden cabinets and vanities from China. If the ITC determines that such injury does not exist, this proceeding will be terminated and all securities posted will be refunded or canceled. If the ITC determines that such injury does exist, Commerce will issue an antidumping duty order directing CBP to assess, upon further instruction by Commerce, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.
In the event that the ITC issues a final negative injury determination, this notice will serve as the only reminder to parties subject to the APO of their responsibility concerning the destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.
This notice also serves as an initial reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation. Failure to comply with this requirement could result in Commerce's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of doubled antidumping duties.
This determination is issued and published in accordance with sections 735(d) and 777(i)(1) of the Act, and 19 CFR 351.210(c).
The merchandise subject to this investigation consists of wooden cabinets and vanities that are for permanent installation (including floor mounted, wall mounted, ceiling hung or by attachment of plumbing), and wooden components thereof. Wooden cabinets and vanities and wooden components are made substantially of wood products, including solid wood and engineered wood products (including those made from wood particles, fibers, or other wooden materials such as plywood, strand board, block board, particle board, or fiberboard), or bamboo. Wooden cabinets and vanities consist of a cabinet box (which typically includes a top, bottom, sides, back, base blockers, ends/end panels, stretcher rails, toe kicks, and/or shelves) and may or may not include a frame, door, drawers and/or shelves. Subject merchandise includes wooden cabinets and vanities with or without wood veneers, wood, paper or other overlays, or laminates, with or without non-wood components or trim such as metal, marble, glass, plastic, or other resins, whether or not surface finished or unfinished, and whether or not completed.
Wooden cabinets and vanities are covered by the investigation whether or not they are imported attached to, or in conjunction with, faucets, metal plumbing, sinks and/or sink bowls, or countertops. If wooden cabinets or vanities are imported attached to, or in conjunction with, such merchandise, only the wooden cabinet or vanity is covered by the scope.
Subject merchandise includes the following wooden component parts of cabinets and vanities: (1) Wooden cabinet and vanity frames (2) wooden cabinet and vanity boxes (which typically include a top, bottom, sides, back, base blockers, ends/end panels, stretcher rails, toe kicks, and/or shelves), (3) wooden cabinet or vanity doors, (4) wooden cabinet or vanity drawers and drawer components (which typically include sides, backs, bottoms, and faces), (5) back panels and end panels, (6) and desks, shelves, and tables that are attached to or incorporated in the subject merchandise.
Subject merchandise includes all unassembled, assembled and/or “ready to assemble” (RTA) wooden cabinets and vanities, also commonly known as “flat packs,” except to the extent such merchandise is already covered by the scope of antidumping and countervailing duty orders on
Subject merchandise also includes wooden cabinets and vanities and in-scope components that have been further processed in a third country, including but not limited to one or more of the following: Trimming,
Excluded from the scope of this investigation, if entered separate from a wooden cabinet or vanity are:
(1) Aftermarket accessory items which may be added to or installed into an interior of a cabinet and which are not considered a structural or core component of a wooden cabinet or vanity. Aftermarket accessory items may be made of wood, metal, plastic, composite material, or a combination thereof that can be inserted into a cabinet and which are utilized in the function of organization/accessibility on the interior of a cabinet; and include:
• Inserts or dividers which are placed into drawer boxes with the purpose of organizing or dividing the internal portion of the drawer into multiple areas for the purpose of containing smaller items such as cutlery, utensils, bathroom essentials,
• Round or oblong inserts that rotate internally in a cabinet for the purpose of accessibility to foodstuffs, dishware, general supplies,
(2) Solid wooden accessories including corbels and rosettes, which serve the primary purpose of decoration and personalization.
(3) Non-wooden cabinet hardware components including metal hinges, brackets, catches, locks, drawer slides, fasteners (nails, screws, tacks, staples), handles, and knobs.
(4) Medicine cabinets that meet all of the following five criteria are excluded from the scope: (1) Wall mounted; (2) assembled at the time of entry into the United States; (3) contain one or more mirrors; (4) be packaged for retail sale at time of entry; and (5) have a maximum depth of seven inches.
Also excluded from the scope of this investigation are:
(1) All products covered by the scope of the antidumping duty order on
(2) All products covered by the scope of the antidumping and countervailing duty orders on
Imports of subject merchandise are classified under Harmonized Tariff Schedule of the United States (HTSUS) statistical numbers 9403.40.9060 and 9403.60.8081. The subject component parts of wooden cabinets and vanities may be entered into the United States under HTSUS statistical number 9403.90.7080. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this investigation is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
The Department of Commerce (Commerce) determines that countervailable subsidies are being provided to producers and/or exporters of wooden cabinets and vanities and componets thereof (wooden cabinets and vanities) from the People's Republic of China (China).
Applicable February 28, 2020.
Justin Neuman or Benito Ballesteros, AD/CVD Operations, Office V, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230; telephone: (202) 482-0486 or (202) 482-7425, respectively.
On August 12, 2019, Commerce published the
A summary of the events that occurred since Commerce published the
The period of investigation (POI) is July 1, 2018 through December 31, 2018.
The products covered by this investigation are wooden cabinets and vanities from China. For a complete description of the scope of this investigation,
Commerce issued a Preliminary Scope Decision Memorandum.
The subsidy programs under investigation, and the issues raised in the case and rebuttal briefs submitted by parties in this investigation, are discussed in the Issues and Decision Memorandum. A list of the issues that parties raised is attached to this notice as Appendix II.
Commerce conducted this investigation in accordance with section 701 of the Tariff Act of 1930, as amended (the Act). For each of the subsidy programs found countervailable, Commerce determines that there is a subsidy,
In accordance with section 705(c)(1)(B)(i)(I) of the Act, we calculated individual estimated subsidy rates for Ancientree, Foremost and Meisen. Additionally, consistent with the
As provided for under section 782(i) of the Act, Commerce verified the information reported by Ancientree, Foremost, and Meisen. We used standard verification procedures, including an examination of relevant accounting records and original source documents provided by the respondents.
Based on our review and analysis of the comments received from parties, minor corrections presented at verification, and our verification findings, we made certain changes to the subsidy rate calculations for the respondents. As a result of the changes to the respondents' calculated rates, Commerce has revised the all-others rate. Commerce has also revised the total AFA rate. For a discussion of these changes,
As noted above, we calculated individual estimated subsidy rates for Ancientree, Foremost and Meisen, and relied on AFA to assign subsidy rates to AiDiJia and Deway, because they failed to respond to Commerce's requests for information.
Section 705(c)(5)(A)(i) of the Act states that, for companies not individually investigated, Commerce will determine an all-others rate equal to the weighted-average countervailable subsidy rates established for exporters and/or producers individually investigated, excluding any zero and
Commerce determines the total estimated net countervailable subsidy rates to be the following:
We intend to disclose to parties the calculations performed in this proceeding within five days of any public announcement of this notice in accordance with 19 CFR 351.224(b).
As a result of our
If the U.S. International Trade Commission (ITC) issues a final affirmative injury determination, we intend to issue a countervailing duty (CVD) order, reinstate the suspension of liquidation under section 706(a) of the Act, and require a cash deposit of estimated countervailing duties for entries of subject merchandise in the amounts indicated above. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled.
In accordance with section 705(d) of the Act, we will notify the ITC of our determination. Because the final determination in this proceeding is affirmative, in accordance with section 705(b) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of wooden cabinets and vanities from China no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded. If the ITC determines that such injury does exist, Commerce will issue a CVD order directing CBP to assess, upon further instruction by Commerce, countervailing duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation, as discussed above in the “Continuation of Suspension of Liquidation” section.
In the event that the ITC issues a final negative injury determination, this notice will serve as the only reminder to parties subject to the APO of their responsibility concerning the destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.
This determination is issued and published pursuant to sections 705(d) and 777(i) of the Act, and 19 CFR 351.210(c).
The merchandise subject to this investigation consists of wooden cabinets and vanities that are for permanent installation (including floor mounted, wall mounted, ceiling hung or by attachment of plumbing), and wooden components thereof. Wooden cabinets and vanities and wooden components are made substantially of wood products, including solid wood and engineered wood products (including those made from wood particles, fibers, or other wooden materials such as plywood, strand board, block board, particle board, or fiberboard), or bamboo. Wooden cabinets and vanities consist of a cabinet box (which typically includes a top, bottom, sides, back, base blockers, ends/end panels, stretcher rails, toe kicks, and/or shelves) and may or may not include a frame, door, drawers and/or shelves. Subject merchandise includes wooden cabinets and vanities with or without wood veneers, wood, paper or other overlays, or laminates, with or without non-wood components or trim such as metal, marble, glass, plastic, or other resins, whether or not surface finished or unfinished, and whether or not completed.
Wooden cabinets and vanities are covered by the investigation whether or not they are imported attached to, or in conjunction with, faucets, metal plumbing, sinks and/or sink bowls, or countertops. If wooden cabinets or vanities are imported attached to, or in conjunction with, such merchandise, only the wooden cabinet or vanity is covered by the scope.
Subject merchandise includes the following wooden component parts of cabinets and vanities: (1) Wooden cabinet and vanity frames (2) wooden cabinet and vanity boxes (which typically include a top, bottom, sides, back, base blockers, ends/end panels, stretcher rails, toe kicks, and/or shelves), (3) wooden cabinet or vanity doors, (4) wooden cabinet or vanity drawers and drawer components (which typically include sides, backs, bottoms, and faces), (5) back panels and end panels, (6) and desks, shelves, and tables that are attached to or incorporated in the subject merchandise.
Subject merchandise includes all unassembled, assembled and/or “ready to assemble” (RTA) wooden cabinets and vanities, also commonly known as “flat packs,” except to the extent such merchandise is already covered by the scope of antidumping and countervailing duty orders on
Subject merchandise also includes wooden cabinets and vanities and in-scope components that have been further processed in a third country, including but not limited to one or more of the following: trimming, cutting, notching, punching, drilling, painting, staining, finishing, assembly, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the in-scope product.
Excluded from the scope of this investigation, if entered separate from a wooden cabinet or vanity are:
(1) Aftermarket accessory items which may be added to or installed into an interior of a cabinet and which are not considered a structural or core component of a wooden cabinet or vanity. Aftermarket accessory
• Inserts or dividers which are placed into drawer boxes with the purpose of organizing or dividing the internal portion of the drawer into multiple areas for the purpose of containing smaller items such as cutlery, utensils, bathroom essentials, etc.
• Round or oblong inserts that rotate internally in a cabinet for the purpose of accessibility to foodstuffs, dishware, general supplies, etc.
(2) Solid wooden accessories including corbels and rosettes, which serve the primary purpose of decoration and personalization.
(3) Non-wooden cabinet hardware components including metal hinges, brackets, catches, locks, drawer slides, fasteners (nails, screws, tacks, staples), handles, and knobs.
(4) Medicine cabinets that meet all of the following five criteria are excluded from the scope: (1) Wall mounted; (2) assembled at the time of entry into the United States; (3) contain one or more mirrors; (4) be packaged for retail sale at time of entry; and (5) have a maximum depth of seven inches.
Also excluded from the scope of this investigation are:
(1) All products covered by the scope of the antidumping duty order on
(2) All products covered by the scope of the antidumping and countervailing duty orders on
Imports of subject merchandise are classified under Harmonized Tariff Schedule of the United States (HTSUS) statistical numbers 9403.40.9060 and 9403.60.8081. The subject component parts of wooden cabinets and vanities may be entered into the United States under HTSUS statistical number 9403.90.7080. Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this investigation is dispositive.
Enforcement and Compliance, International Trade Administration, Department of Commerce.
Applicable February 28, 2020.
Caitlin Monks at (202) 482-2670, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Washington, DC 20230.
On November 12, 2019, the Department of Commerce (Commerce) initiated less-than-fair-value (LTFV) investigations of imports of forged steel fittings from India and the Republic of Korea.
Section 733(b)(1)(A) of the Tariff Act of 1930, as amended (the Act), requires Commerce to issue the preliminary determination in an LTFV investigation within 140 days after the date on which Commerce initiated the investigation. However, section 733(c)(1) of the Act permits Commerce to postpone the preliminary determination until no later than 190 days after the date on which Commerce initiated the investigation if: (A) The petitioner makes a timely request for a postponement; or (B) Commerce concludes that the parties concerned are cooperating, that the investigation is extraordinarily complicated, and that additional time is necessary to make a preliminary determination. Under 19 CFR 351.205(e), the petitioner must submit a request for postponement 25 days or more before the scheduled date of the preliminary determination and must state the reasons for the request. Commerce will grant the request unless it finds compelling reasons to deny the request.
On February 5, 2020, the petitioners
For the reasons stated above and because there are no compelling reasons to deny the request, Commerce, in accordance with section 733(c)(1)(A) of the Act, is postponing the deadline for the preliminary determinations by 50 days (
This notice is issued and published pursuant to section 733(c)(2) of the Act and 19 CFR 351.205(f)(1).
National Ocean Service, National Oceanic and Atmospheric Administration (NOAA), Department of Commerce.
Notice of open public meeting and request for comments.
The Hydrographic Services Review Panel (HSRP) will hold a meeting that will be open to the public, April 28-30, 2020, in Oahu, Hawaii. Public comments are requested in advance and/or during the meeting. Information about the HSRP meeting, agenda, presentations, webinar registration, and background documents will be posted and updated online. To promote zero waste, all meeting documents will be available for downloading the week prior to the meeting at:
The meeting is two and a half days during April 28-30, 2020, in Oahu, HI. The agenda, speakers and times are subject to change. The draft agenda will be posted online in January 2020 and the meeting location will be announced in April 2020. For updates, please check online, sign up for emails, or contact the organizers. To receive the meeting announcements by email including the agenda, venue, and to inform the attendance estimate, please sign up below or email:
Lynne Mersfelder-Lewis, HSRP program manager, National Ocean Service, Office of Coast Survey, NOAA (N/CS), 1315 East-West Highway, SSMC3 #6413, Silver Spring, Maryland 20910; email:
The meeting is open to the public. To receive meeting updates and inform the participant list, please sign up as noted above, or you can email your name, organization and email address contact. Seating will be available on a first-come, first-served basis. Public comment is encouraged on the topics of the HSRP meeting and there are public comment periods scheduled each day noted in the agenda. Each individual or group making verbal or written comments will be limited to one comment per public comment period and a total time of five (5) minutes, will be recorded and transcribed, and comments will become part of the meeting record. For those not onsite, comments can be submitted in writing via email prior to the meeting or by email during the meeting. Public comments are encouraged and individuals or groups who would like to submit advance written statements should email their comments to
The Hydrographic Services Review Panel (HSRP) is a Federal Advisory Committee established to advise the Under Secretary of Commerce for Oceans and Atmosphere, the NOAA Administrator, on matters related to the responsibilities and authorities set forth in section 303 of the Hydrographic Services Improvement Act of 1998, as amended, and such other appropriate matters that the Under Secretary refers to the Panel for review and advice. The charter, issue papers with recommendations, and other information are located online at:
Past recommendations and issue papers are at:
Past HSRP public meeting summary reports, agendas, presentations, transcripts, and other information is available online at:
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice; receipt of application.
Notice is hereby given that NMFS' Marine Mammal Laboratory, 7600 Sand Point Way NE, Building 4, Seattle, WA 98115 (Responsible Party: John Bengtson, Ph.D.), has applied in
Written, telefaxed, or email comments must be received on or before March 30, 2020.
The application and related documents are available for review by selecting “Records Open for Public Comment” from the “Features” box on the Applications and Permits for Protected Species (APPS) home page,
These documents are also available upon written request or by appointment in the Permits and Conservation Division, Office of Protected Resources, NMFS, 1315 East-West Highway, Room 13705, Silver Spring, MD 20910; phone (301) 427-8401; fax (301) 713-0376.
Written comments on this application should be submitted to the Chief, Permits and Conservation Division, at the address listed above. Comments may also be submitted by facsimile to (301) 713-0376, or by email to
Those individuals requesting a public hearing should submit a written request to the Chief, Permits and Conservation Division at the address listed above. The request should set forth the specific reasons why a hearing on this application would be appropriate.
Sara Young or Shasta McClenahan, (301) 427-8401.
The subject permit is requested under the authority of the Marine Mammal Protection Act of 1972, as amended (MMPA; 16 U.S.C. 1361
The applicant requests a research permit to investigate population status and trends, demographics, health and disease, and foraging ecology of northern fur seals. Up to 38,491 northern fur seals may be taken annually from the California stock at San Miguel Island and the Farallon Islands in California, including 1,580 by capture and handle, 36,900 by incidental disturbance and 11 by unintentional mortality. Up to 375,431 northern fur seals may be taken annually from the Eastern Pacific stock at the Pribilof Islands and Bogoslof Island in Alaska, including 18,200 by capture and handle, 357,220 by incidental disturbance, and 11 by unintentional mortality. Unlimited numbers of samples may be salvaged from dead animals, received, and/or exported for analysis. Take activities involve ground survey, aerial survey, observation, photograph/video, capture/handling, and collection of scat/spew. Procedures to be performed on handled animals include: Administration of drugs and anesthesia, stomach lavage, external and internal instrumentation, marking, measuring, restraint, biological sampling and swabs, stable isotopes and serial blood samples, ultrasound, and weighing. Up to 150 Western Steller sea lions (
In compliance with the National Environmental Policy Act of 1969 (42 U.S.C. 4321
Concurrent with the publication of this notice in the
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting.
NMFS is holding a meeting to discuss the future management of the U.S. West Coast Pacific bluefin tuna (PBF) fishery, including management objectives and a management framework.
The meeting will be held April 23, 2020, from 9 a.m. to 4:30 p.m. PST, or until business concludes.
The meeting will be held in Room 3400 at the Glenn M. Anderson Federal Building, 501 W Ocean Blvd., Long Beach, California 90802. Please notify Eric Poncelet (meeting facilitator), at
Celia Barroso, West Coast Region, NMFS, at
Stakeholders have expressed an interest in developing management objectives and a long-term management framework for PBF. In September 2018, the Pacific Fishery Management Council (PFMC) recommended that its Highly Migratory Species Management Team develop a long-term management strategy for PBF (see the PFMC's “September 2018 Decision Summary Document” at
The PBF U.S. stakeholder meeting topics will include, but are not limited to, the following:
(1) An overview of international management of PBF and current management of the U.S. PBF fishery; and,
(2) Potential management options for 2021-2022 and in the long-term.
The meeting location is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Celia Barroso, at
16 U.S.C. 951
Notice of meeting.
The Advisory Committee on Commercial Remote Sensing (“ACCRES” or “the Committee”) will meet March 18, 2020.
The meeting is scheduled as follows: March 18, 2020, 9 a.m.-4 p.m. There will be a one hour lunch break from 12 p.m.-1 p.m.
The meeting will be held at the George Washington University's Elliott School of International Relations located at 1957 E Street NW, Room 505, Washington, DC 20052.
Tashaun Pierre, NOAA/NESDIS/CRSRA, 1335 East West Highway, G-101, Silver Spring, Maryland 20910; (301) 713-7047 or
As required by Section 10(a)(2) of the Federal Advisory Committee Act, 5 U.S.C. App. 2 (FACA) and its implementing regulations,
The meeting will be open to the public pursuant to Section 10(a)(1) of the FACA. During the meeting, the Committee will receive updates on NOAA's Commercial Remote Sensing Regulatory Affairs activities and discuss updates to the commercial remote sensing regulatory regime. The Committee will be available to receive public comments on its activities.
The meeting is physically accessible to people with disabilities. Requests for special accommodations may be directed to Tashaun Pierre, NOAA/NESDIS/CRSRA, 1335 East West Highway, G-101, Silver Spring, Maryland 20910; (301) 713-7047 or
In accordance with 41 CFR 102-3.140(b), the meeting room is sufficient to accommodate advisory committee members, agency staff, and a reasonable number of interested members of the public. However, to avoid overcrowding should an unexpected number of members of the public attend the meeting, ACCRES invites interested members of the public to RSVP through the following link:
ACCRES expects that public statements presented at its meetings will not be repetitive of previously-submitted oral or written statements. In general, each individual or group making an oral presentation may be limited to a total time of five minutes. Written comments sent to NOAA/NESDIS/CRSRA on or before March 12, 2020 will be provided to Committee members in advance of the meeting. Comments received too close to the meeting date will normally be provided to Committee members at the meeting.
Office of Ocean Exploration and Research (OER), National Oceanic and Atmospheric Administration (NOAA), Department of Commerce (DOC).
Solicitation of Applications.
NOAA is soliciting applications to fill up to six membership vacancies on the Ocean Exploration Advisory Board (OEAB). The new OEAB members will serve initial three-year terms, renewable once.
Application materials must be received no later than March 30, 2020.
Submit application materials to Christa Rabenold via mail or email. Mail: NOAA/OER, 1315 East West Highway, SSMC3 Rm 10310, Silver Spring, MD, 20910; Email:
David McKinnie, OEAB Designated Federal Officer, NOAA/OER, 7600 Sand Point Way NE, Seattle, WA 98115; 206-526-6950;
NOAA is soliciting applications to fill up to six vacancies on the OEAB with individuals demonstrating expertise in areas relevant to the statutory purpose of the OEAB and the ocean exploration act established under 33 U.S.C. 3401
The purpose of the OEAB is to advise the NOAA Administrator on matters pertaining to ocean exploration. The OEAB functions as an advisory body in accordance with the Federal Advisory Committee Act (FACA), as amended, 5 U.S.C. App., with the exception of section 14. It reports to the NOAA Administrator, as directed by 33 U.S.C. 3405.
The OEAB consists of approximately ten members, including a chair and co-chair(s), designated by the NOAA Administrator in accordance with FACA requirements and the terms of the approved OEAB Charter.
The OEAB was established:
(1) To advise the Administrator on priority areas for survey and discovery;
(2) To assist the program in the development of a five-year strategic plan for the fields of ocean, marine, and Great Lakes science, exploration, and discovery;
(3) To annually review the quality and effectiveness of the proposal review process established under section 12003(a)(4); and
(4) To provide other assistance and advice as requested by the Administrator.
OEAB members are appointed as special government employees (SGEs) and will be subject to the ethical standards applicable to SGEs. Members are reimbursed for actual and reasonable expenses incurred in performing such duties but will not be reimbursed for their time. All OEAB members serve at the discretion of the NOAA Administrator.
The OEAB meets three to four times each year, exclusive of subcommittee, task force, and working group meetings.
As a Federal Advisory Committee, the OEAB's membership is required to be balanced in terms of viewpoints represented and the functions to be performed as well as including the interests of geographic regions of the country and the diverse sectors of our society.
For more information about the OEAB, please visit
Although the OEAB reports directly to the NOAA Administrator, OER, which is part of the NOAA Office of Oceanic and Atmospheric Research, provides staffing and other support for the OEAB. OER's mission is to explore the ocean for national benefit.
OER:
• Explores the ocean to make discoveries of scientific, economic, and cultural value, with priority given to the U.S. Exclusive Economic Zone and Extended Continental Shelf;
• Promotes technological innovation to advance ocean exploration;
• Provides public access to data and information;
• Encourages the next generation of ocean explorers, scientists, and engineers; and,
• Expands the national ocean exploration program through partnerships.
For more information about OER, please visit
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of a public meeting.
The Gulf of Mexico Fishery Management Council will hold a one-day meeting of its Shrimp Advisory Panel (AP).
The meeting will convene on Tuesday, March 24, 2020, 8:30 a.m.-3 p.m., EDT. For agenda details, see
The meeting will be held at the Gulf Council Headquarters office.
Dr. Matt Freeman, Economist, Gulf of Mexico Fishery Management Council;
The following items are on the agenda, though agenda items may be addressed out of order (changes will be noted on the Council's website when possible.)
Meeting will begin with adoption of agenda, approval of minutes from the March 21, 2019 meeting; and, a review of the scope of work with its members. National Marine Fisheries Service (NMFS) will provide the AP with updated stock assessments, 2018 + preliminary 2019 Gulf shrimp fishery effort and landings, the preliminary 2019 Royal Red index, and the biological review of the Texas closure. NMFS will also discuss the 2019 final rule on modifications to skimmer trawl turtle excluder device (TED) regulations. Gulf Council staff will review Shrimp Fishery Management Plans (FMP) Objectives. The AP will discuss first-hand accounts of changes in the shrimp fishery environment, trends in sales of state shrimp licenses, and any other business items.
The meeting will be broadcast via webinar. You may register for the listen-in access by visiting
The Agenda is subject to change, and the latest version along with other meeting materials will be posted on
Although other non-emergency issues not on the agenda may come before the group for discussion, in accordance with the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act), those issues may not be the subject of formal action during this meeting. Actions will be restricted to those issues specifically identified in this notice and any issues arising after publication of this notice that require emergency action under section 305(c) of the Magnuson-Stevens Act, provided the public has been notified of the Council's intent to take action to address the emergency.
This meeting is physically accessible to people with disabilities. Requests for
16 U.S.C. 1801
National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.
Notice of public meeting (webinar).
The Pacific Fishery Management Council (Pacific Council) will convene a webinar meeting of its Groundfish Management Team (GMT) to discuss items on the Pacific Council's March 2020 meeting agenda. The meeting is open to the public.
The webinar meeting will be held Tuesday, March 24, 2020, from 1 p.m. to 4 p.m., Pacific Daylight Time. The scheduled ending time for the GMT webinar is an estimate, the meeting will adjourn when business for the day is completed.
This meeting will be held via webinar. A public listening station is available at the Pacific Council office (address below). To attend the webinar (1) join the meeting by using this link:
Todd Phillips, Staff Officer; telephone: (503) 820-2426; email:
The primary purpose of the GMT webinar is to prepare for the Pacific Council's March 2020 agenda items. The GMT will discuss items related to groundfish management and administrative Pacific Council agenda items. A detailed agenda for the webinar will be available on the Pacific Council's website prior to the meeting. The GMT may also address other assignments relating to groundfish management. No management actions will be decided by the GMT.
Although non-emergency issues not contained in the meeting agenda may be discussed, those issues may not be the subject of formal action during this meeting. Action will be restricted to those issues specifically listed in this notice and any issues arising after publication of this notice that require emergency action under Section 305(c) of the Magnuson-Stevens Fishery Conservation and Management Act, provided the public has been notified of the GMT's intent to take final action to address the emergency.
The public listening station is physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aids should be directed to Mr. Kris Kleinschmidt, (503) 820-2412,
16 U.S.C. 1801
The United States Patent and Trademark Office (USPTO) will submit to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act of 1995.
In the interest of national security, patent laws and regulations place certain limitations on the disclosure of information contained in patents and patent applications and on the filing of applications for patents in foreign countries.
The filing of a patent application is considered a request for a foreign filing license. However, in some instances an applicant may need a license for filing patent applications in foreign countries prior to a filing in the USPTO or sooner than the anticipated licensing of a pending patent application.
Responses to this information collection are necessary to obtain a permit to disclose, modify, or rescind a secrecy order; to obtain general or group permits; to obtain foreign filing licenses, including retroactive foreign filing licenses; to expedite the handling of a license; or to change the scope of a license.
Once submitted, the request will be publicly available in electronic format through
Further information can be obtained by:
•
•
Written comments and recommendations for the proposed information collection should be sent on or before March 30, 2020 to Nicholas A. Fraser, OMB Desk Officer, via email to
The United States Patent and Trademark Office (USPTO) will submit to the Office of Management and Budget (OMB) for clearance the following proposal for collection of information under the provisions of the Paperwork Reduction Act of 1995.
Once submitted, the request will be publicly available in electronic format through
Further information can be obtained by:
•
•
Written comments and recommendations for the proposed information collection should be sent on or before March 30, 2020 to Nicholas A. Fraser, OMB Desk Officer, via email to
Committee for Purchase From People Who Are Blind or Severely Disabled.
Notice of availability.
Pursuant to
Applicable February 28, 2020.
Brian Hoey, 703.603.2114,
Section 3 of Executive Order 13891 requires each federal agency to “establish or maintain on its website a single, searchable, indexed database that contains or links to all guidance documents in effect from such agency or component.” Exec. Order No. 13,891, 84 FR 55,235 (Oct. 15, 2019).
OMB Memorandum M-20-02 further requires agencies to “send to the
In compliance with the above, the Commission is announcing the availability of a single, searchable, indexed database containing all Commission guidance documents currently in effect, which may be accessed at
Committee for Purchase From People Who Are Blind or Severely Disabled.
Additions to and Deletions from the Procurement List.
This action adds products to the Procurement List that will be furnished by nonprofit agencies employing persons who are blind or have other severe disabilities, and deletes products and a service from the Procurement List previously furnished by such agencies.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S Clark Street, Suite 715, Arlington, Virginia 22202-4149.
Michael R. Jurkowski, Telephone: (703) 603-2117, Fax: (703) 603-0655, or email
This notice is published pursuant to 41 U.S.C. 8503(a)(2) and 41 CFR 51-2.3. Its purpose is to provide interested persons an opportunity to submit comments on the proposed actions.
On 1/3/2020, the Committee for Purchase From People Who Are Blind or Severely Disabled published notice of proposed additions to the Procurement List. This notice is published pursuant to 41 U.S.C. 8503 (a)(2) and 41 CFR 51-2.3.
After consideration of the material presented to it concerning capability of qualified nonprofit agencies to provide the products and impact of the additions on the current or most recent contractors, the Committee has determined that the products listed below are suitable for procurement by the Federal Government under 41 U.S.C. 8501-8506 and 41 CFR 51-2.4.
I certify that the following action will not have a significant impact on a substantial number of small entities. The major factors considered for this certification were:
1. The action will not result in any additional reporting, recordkeeping or other compliance requirements for small entities other than the small organizations that will furnish the products to the Government.
2. The action will result in authorizing small entities to furnish the products to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 8501-8506) in connection with the products proposed for addition to the Procurement List.
Accordingly, the following products are added to the Procurement List:
On 1/17/2020 and 1/24/2020, the Committee for Purchase From People Who Are Blind or Severely Disabled published notice of proposed deletions from the Procurement List.
After consideration of the relevant matter presented, the Committee has determined that the products and service listed below are no longer suitable for procurement by the Federal Government under 41 U.S.C. 8501-8506 and 41 CFR 51-2.4.
I certify that the following action will not have a significant impact on a substantial number of small entities. The major factors considered for this certification were:
1. The action will not result in additional reporting, recordkeeping or other compliance requirements for small entities.
2. The action may result in authorizing small entities to furnish the products and service to the Government.
3. There are no known regulatory alternatives which would accomplish the objectives of the Javits-Wagner-O'Day Act (41 U.S.C. 8501-8506) in connection with the products and service deleted from the Procurement List.
Accordingly, the following products and service are deleted from the Procurement List:
Committee for Purchase From People Who Are Blind or Severely Disabled.
Proposed addition to and deletions from the Procurement List.
The Committee is proposing to add a service to the Procurement List that will be furnished by nonprofit agencies employing persons who are blind or have other severe disabilities, and deletes a product and services previously furnished by such agencies.
Committee for Purchase From People Who Are Blind or Severely Disabled, 1401 S Clark Street, Suite 715, Arlington, Virginia 22202-4149.
For further information or to submit comments contact: Michael R. Jurkowski, Telephone: (703) 603-2117, Fax: (703) 603-0655, or email
This notice is published pursuant to 41 U.S.C. 8503(a)(2) and 41 CFR 51-2.3. Its purpose is to provide interested persons an opportunity to submit comments on the proposed actions.
If the Committee approves the proposed additions, the entities of the Federal Government identified in this notice will be required to procure the service listed below from nonprofit agencies employing persons who are blind or have other severe disabilities.
The following service is proposed for addition to the Procurement List for production by the nonprofit agencies listed:
The following product and services are proposed for deletion from the Procurement List:
Bureau of Consumer Financial Protection.
Notice of a new system of records.
In accordance with the Privacy Act of 1974, as amended, the Bureau of Consumer Financial Protection, hereinto referred to as the Consumer Financial Protection Bureau (Bureau), gives notice of the establishment of a Privacy Act System of Records. The Federal Document Management System (FDMS) provides the Bureau with the ability to electronically access and manage its rulemaking dockets and other dockets related to documents published in the
Comments must be received no later than
You may submit comments, identified by Docket No. CFPB-2020-0011, by any of the following methods:
•
•
All submissions must include the agency name and docket number for this notice. In general, all comments received will be posted without change to
Tannaz Haddadi, Acting Chief Privacy Officer, (202) 435-7058. If you require this document in an alternative electronic format, please contact
The Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203, title X, established the Bureau. The Bureau will maintain the records covered by this notice. The system of records described in this notice, “CFPB.028—Federal Document Management System” will collect information to enable the Bureau to electronically access and manage its rulemaking dockets, or other dockets, related to documents published in the
The report of a new system of records has been submitted to the Committee on Oversight and Reform of the House of Representatives, the Committee on Homeland Security and Governmental Affairs of the Senate, and the Office of Management and Budget, pursuant to OMB Circular A-108, “Federal Agency Responsibilities for Review, Reporting, and Publication under the Privacy Act” (December 23, 2016),
The system of records entitled “CFPB.028—Federal Docket Management System” is published in its entirety below.
CFPB.028—Federal Docket Management System.
This system does not contain any classified information or data.
Associate Executive Secretariat, Bureau of Consumer Financial Protection, 1700 G Street NW, Washington, DC 20552; (202) 435-9169.
Public Law 111-203, title X, sections 1013, 1021, 1022, codified at 12 U.S.C. 5492, 5511, 5512.
The purpose of this system of records is to maintain and organize comments submitted to the Bureau in response to Bureau documents published in the
This system covers individuals who provide personal information while submitting a public comment, potentially including attachments, to a Bureau docket.
Information submitted by public comment may include full name, affiliated organization, postal address, email address, phone and fax number, and name of any individual serving as a representative for the individual submitting the comment.
Information in this system is posted by the Bureau or submitted by individuals and organizations who file public comments, including supporting materials, in response to Bureau documents published in the
These records may be disclosed, consistent with the Bureau's Disclosure of Records and Information Rules, promulgated at 12 CFR part 1070, to:
(1) Appropriate agencies, entities, and persons when (a) the Bureau suspects or has confirmed that there has been a breach of the system of records; (b) the Bureau has determined that as a result of the suspected or confirmed breach there is a risk of harm to individuals, the Bureau (including its information systems, programs, and operations), the Federal Government, or national security; and (c) the disclosure made to such agencies, entities, and persons is reasonably necessary to assist in connection with the Bureau's efforts to respond to the suspected or confirmed breach or to prevent, minimize, or remedy such harm;
(2) Another Federal agency or Federal entity, when the Bureau determines that information from this system of records is reasonably necessary to assist the recipient agency or entity in (a) responding to a suspected or confirmed breach or (b) preventing, minimizing, or remedying the risk of harm to individuals, the recipient agency or entity (including its information systems, programs, and operations), the Federal Government, or national security, resulting from a suspected or confirmed breach.
(3) Another Federal or State agency to: (a) Permit a decision as to access, amendment or correction of records to be made in consultation with or by that agency, or (b) verify the identity of an individual or the accuracy of information submitted by an individual who has requested access to or amendment or correction of records;
(4) The Office of the President in response to an inquiry from that office made at the request of the subject of a record or a third party on that person's behalf;
(5) Congressional offices in response to an inquiry made at the request of the individual to whom the record pertains;
(6) Contractors, agents, or other authorized individuals performing work on a contract, service, cooperative agreement, job, or other activity on behalf of the Bureau or Federal Government and who have a need to access the information in the performance of their duties or activities;
(7) The U.S. Department of Justice (DOJ) for its use in providing legal advice to the Bureau or in representing the Bureau in a proceeding before a court, adjudicative body, or other administrative body, where the use of such information by the DOJ is deemed by the Bureau to be relevant and necessary to the advice or proceeding, and in the case of a proceeding, such proceeding names as a party in interest:
(a) The Bureau;
(b) Any employee of the Bureau in his or her official capacity;
(c) Any employee of the Bureau in his or her individual capacity where DOJ has agreed to represent the employee; or
(d) The United States, where the Bureau determines that litigation is likely to affect the Bureau or any of its components;
(8) A grand jury pursuant either to a Federal or State grand jury subpoena, or to a prosecution request that such record be released for the purpose of its introduction to a grand jury, where the subpoena or request has been specifically approved by a court. In those cases where the Federal Government is not a party to the proceeding, records may be disclosed if a subpoena has been signed by a judge;
(9) A court, magistrate, or administrative tribunal in the course of an administrative proceeding or judicial proceeding, including disclosures to opposing counsel or witnesses (including expert witnesses) in the course of discovery or other pre-hearing exchanges of information, litigation, or settlement negotiations, where relevant or potentially relevant to a proceeding, or in connection with criminal law proceedings;
(10) Appropriate Federal, State, local, foreign, tribal, or self-regulatory organizations or agencies responsible for investigating, prosecuting, enforcing, implementing, issuing, or carrying out a statute, rule, regulation, order, policy, or license if the information may be relevant to a potential violation of civil or criminal law, rule, regulation, order, policy, or license;
(11) The public or certain stakeholders in the form of Bureau documents, including final rules or reports, that use, consider, or discuss comments received by the Bureau; or
(12) The General Services Administration (GSA) for its use in management of the e-Rulemaking Program.
Records are maintained in paper and electronic media.
Records are retrievable by a variety of fields including, but not limited to, Name of the individual or entity submitting a comment or supporting material, Contact Information submitted in or as part of a comment, Agency, Docket Type, Docket Sub-Type, Agency Docket ID, Docket Title, Docket Category, Document Type, CFR Part, Date Comment Received, and
Dockets are considered permanent records and transferred to the National Archives and Records Administration after fifteen years. Individual comments on rulemaking are temporary records that are destroyed after being uploaded into the FDMS and validated. Hard copies of comments that are mailed to the Bureau are transferred to an offsite location for destruction after they are scanned, uploaded to the FDMS, and validated.
Access to electronic records is restricted to authorized personnel who have been issued non-transferrable access codes and passwords. Hard copies of records received directly by the Bureau are properly safeguarded and maintained in controlled access storage on-site at the Bureau or at an offsite location before destruction.
An individual seeking access to any record pertaining to him or her contained in this system of records may inquire in writing in accordance with instructions in 12 CFR 1070.50
An individual seeking to contest the content of any record pertaining to him or her contained in this system of records may inquire in writing in accordance with instructions in 12 CFR 1070.50
An individual seeking notification whether any record contained in this system of records pertains to him or her may inquire in writing in accordance with instructions in 12 CFR 1070.50
None.
This is a new system of records.
Defense Security Cooperation Agency, Department of Defense.
Arms sales notice.
The Department of Defense is publishing the unclassified text of an arms sales notification.
Karma Job at
This 36(b)(5)(C) arms sales notification is published to fulfill the requirements of section 155 of Public Law 104-164 dated July 21, 1996. The following is a copy of a letter to the Speaker of the House of Representatives, and Transmittal 20-0D.
(i)
(ii)
Date: June 16, 2014
Military Department: Air Force
(iii)
This transmittal reports the extension of the PEACE CARVIN II detachment at Luke Air Force Base for an additional three and a half years (3.5 years). It includes the following non-MDE items: eight (8) CATM-9M Captive Air Training Missiles, jet fuel, containers, publications and technical documentation, tactics manuals and academic instruction, maintenance, clothing and individual equipment, execution and support of CONUS exercise deployments, airlift and aerial refueling, support equipment, spare and repair parts, repair and return, personnel training and training equipment, U.S. Government and contractor technical and logistics
(iv)
(v)
(vi)
(vii)
Defense Security Cooperation Agency, Department of Defense.
Arms sales notice.
The Department of Defense is publishing the unclassified text of a section 36(b)(1) arms sales notification.
Karma Job at
This 36(b)(1) arms sales notification is published to fulfill the requirements of section 155 of Public Law 104-164 dated July 21, 1996. The following is a copy of a letter to the Speaker of the House of Representatives, Transmittal 20-02, Policy Justification and Sensitivity of Technology.
(i)
(ii)
(iii)
Also included are DATM-158C LRASM, Captive Air Training Missiles (CATM-158C LRASM), containers, support and test equipment, publications and technical documentation, personnel training and training equipment, U.S. Government and contractor representatives technical assistance, engineering and logistics support services, and other related elements of logistics support.
(iv)
(v)
(vi)
(vii)
(viii)
* As defined in Section 47(6) of the Arms Export Control Act.
The Government of Australia has requested to buy up to two hundred (200) AGM-158C, Long Range Anti-Ship Missiles (LRASMs); and up to eleven (11) ATM-158C LRASM Telemetry Variant (Inert). Also included are DATM-158C LRASM, Captive Air Training Missiles (CATM-158C LRASM), containers, support and test equipment, publications and technical documentation, personnel training and training equipment, U.S. Government and contractor representatives technical assistance, engineering and logistics support services, and other related elements of logistics support. The total estimated cost is $990 million.
This proposed sale will support the foreign policy and national security objectives of the United States. Australia is one of our most important allies in the Western Pacific. The strategic location of this political and economic power contributes significantly to ensuring peace and economic stability in the region.
Australia intends to use the missiles on its F-18 aircraft and will provide enhanced capabilities in defense of critical sea-lanes. The proposed sale of the missiles and support will increase the Australian Navy's maritime partnership potential and align its capabilities with existing regional baselines. This is Australia's first purchase of the missiles. Australia will not have any difficulty absorbing these weapons into its armed forces.
The proposed sale of this equipment and support will not alter the basic military balance in the region.
The prime contractor will be Lockheed Martin, Orlando, Florida. There are no known offset agreements proposed in connection with this potential sale.
Implementation of this proposed sale will require annual trips to Australia involving U.S. Government and contractor representatives for technical reviews, support, and oversight for approximately five years.
There will be no adverse impact on U.S. defense readiness as a result of this proposed sale.
(vii)
1. The AGM-158C, Long Range Anti-Ship Missile (LRASM) system is classified SECRET. The LRASM is a non-nuclear tactical weapon system. It provides a day, night, and adverse weather, standoff air-to-surface capability and is an effective AntiSurface Warfare missile. The LRASM incorporates components, software, and technical design information that are considered sensitive. The following components being conveyed by the proposed sale that are considered sensitive include:
2. These elements are essential to the ability of the LRASM missile to selectively engage hostile targets under a wide range of operations, tactical and environmental conditions.
3. If a technologically advanced adversary were to obtain knowledge of the specific hardware and software elements, the information could be used to develop countermeasures, which might reduce weapon system effectiveness or be used in the development of a system with similar or advanced capabilities.
4. A determination has been made that Australia can provide substantially the same degree of protection for the sensitive technology being released as the U.S. Government. This proposed sale is necessary to further the U.S. foreign policy and national security objectives outlined in the Policy Justification.
5. All defense articles and services listed on this transmittal have been authorized for release and export to the Government of Australia.
Defense Nuclear Facilities Safety Board.
Notice of Public Hearing.
Notice is hereby given that the Defense Nuclear Facilities Safety Board (DNFSB) will hold a Public Hearing regarding the status of the Savannah River Site (SRS). The purpose of this Public Hearing is to gather information and discuss Department of Energy (DOE) and National Nuclear Security Administration (NNSA) actions that could impact the safety posture of particular operations at SRS.
The Public Hearing will be held on March 19, 2020, from 3:00 p.m. to 9:30 p.m.
The Public Hearing will be held in the Etherredge Center at the University of South Carolina Aiken. The Etherredge Center is located at 340 Scholar Loop, Aiken, South Carolina 29801.
Tara Tadlock, Manager of Board Operations, Defense Nuclear Facilities Safety Board, 625 Indiana Avenue NW, Suite 700, Washington, DC 20004-2901, (800) 788-4016. This is a toll-free number.
This Public Hearing will be composed of four sessions. In Session 1, Board Members will address DOE's past actions and future plans for addressing Recommendation 2012-1 regarding Building 235-F. The Board's objective for this session is to gather information related to the proposed changes to DOE's Implementation Plan and deactivation strategy, the actions and steps for deactivation of Building 235-F, and the plans for decommissioning, including the end state of Building 235-F.
In Session 2, Board Members will address Federal oversight and technical staffing needs. The Board will pay particular attention to the adequacy of current Office of Environmental Management (EM) and NNSA staffing to conduct oversight missions. This will include discussions of shortages in both facility representative positions for existing facilities and engineering positions with regard to personnel who review safety bases and perform safety system oversight, and the subsequent approach of delegating inherently federal functions to the contractor as a substitute for federal oversight. Session 2 will also include discussions of future technical staffing needs as new site missions, such as Savannah River Plutonium Production Facility operations and Surplus Plutonium blend-down, ramp up.
In Session 3, Board Members will address the safety poster of the Savannah River Tritium Enterprise (SRTE) facilities. The Board's objective for this session is to discuss the SRTE safety basis, completed improvements, and ongoing and planned actions to
In Sessions 1, 2, and 3, the DNFSB Technical Director will offer testimony presenting the perspective of the DNFSB Staff. Participants representing DOE and NNSA will be announced at
In Session 4, Board Members will hear testimony from interested members of the public. Persons interested in speaking during Session 4 are encouraged to pre-register by submitting a request in writing to the Board's address listed above, emailing
At the beginning of the hearing, the Board will post a list of speakers at the entrance to the hearing room. Anyone who wishes to comment or provide technical information or data may do so in writing, either in lieu of, or in addition to, making an oral presentation. The Board Members may question presenters to the extent deemed appropriate. Written comments and documents will be accepted at the hearing or may be sent to the Board's Washington, DC office. The Board will hold the hearing record open until April 20, 2020, for the receipt of additional materials. Additional details, including the detailed agenda for the hearing, are available at
The hearing will be presented live through internet video streaming. A link to the presentation will be available on the Board's website, and a recording will be posted soon after. A transcript of these sessions and the associated correspondence will be made available on the Board's website. The Board specifically reserves its right to further schedule and otherwise regulate the course of the hearing, to recess, reconvene, postpone, or adjourn the hearing, conduct further reviews, and otherwise exercise its authority under the Atomic Energy Act of 1954, as amended.
42 U.S.C. 2286b(a).
Office of Special Education and Rehabilitative Services (OSERS), Department of Education (ED).
Notice.
In accordance with the Paperwork Reduction Act of 1995, ED is proposing an extension of an existing information collection.
Interested persons are invited to submit comments on or before April 28, 2020.
To access and review all the documents related to the information collection listed in this notice, please use
For specific questions related to collection activities, please contact Samuel Pierre, 202-245-6488.
The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.
The collection of information through Form RSA-509 has enabled RSA to furnish the President and Congress with data on the provision of protection and advocacy services and has helped to establish a sound basis for future funding requests. Data from the form have been used to evaluate the
The respondents to the RSA-509 is the protection and advocacy system in each state. These organizations are private not-for-profit organizations. RSA included the respondents and the national organization that represents them (National Disability Rights Network (NDRN)) in the initial development of this collection of information in an effort to ensure that the information requested could be provided with minimal burden to the respondents.
The collection of information through Form RSA-509 has enabled RSA to furnish the President and Congress with data on the provision of protection and advocacy services and has helped to establish a sound basis for future funding requests. Data from the form have been used to evaluate the effectiveness of eligible systems within individual states in meeting annual priorities and objectives. These data also have been used to indicate trends in the provision of services from year-to-year.
The respondents to the RSA-509 is the protection and advocacy system in each state. These organizations are private not-for-profit organizations. RSA included the respondents and the national organization that represents them (National Disability Rights Network (NDRN)) in the initial development of this collection of information in an effort to ensure that the information requested could be provided with minimal burden to the respondents.
Take notice that the Commission received the following electric rate filings:
Take notice that the Commission received the following electric securities filings:
Take notice that the Commission received the following foreign utility company status filings:
Take notice that the Commission received the following electric reliability filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified comment date. Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
Take notice that on February 19, 2020, pursuant to section 215(d) of the Federal Power Act, 16 U.S.C. 824o(d) and Rule 206 of the Federal Energy Regulatory Commission's (Commission) Rules of Practice and Procedure, 18 CFR 385.206 (2019), Michael Mabee, (Complainant) filed supplemental information and additional recommendations for the record, as a supplement to the formal complaint filed on January 30, 2020, as more fully explained in the supplement to the complaint.
Complainant certifies that copies of the Complaint were served on the contacts as listed on the Commission's list of Corporate Officials.
Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. All interventions, or protests must be filed on or before the comment date.
The Commission encourages electronic submission of protests and interventions in lieu of paper using the eFiling link at
This filing is accessible on-line at
Take notice that the Commission has received the following Natural Gas Pipeline Rate and Refund Report filings:
The filings are accessible in the Commission's eLibrary system by clicking on the links or querying the docket number.
Any person desiring to intervene or protest in any of the above proceedings must file in accordance with Rules 211 and 214 of the Commission's Regulations (18 CFR 385.211 and 385.214) on or before 5:00 p.m. Eastern time on the specified date(s). Protests may be considered, but intervention is necessary to become a party to the proceeding.
eFiling is encouraged. More detailed information relating to filing requirements, interventions, protests, service, and qualifying facilities filings can be found at:
On February 4, 2020, Kaweah River Power Authority (transferor) and Terminus Hydroelectric, LLC (transferee) filed an application for the transfer of license of the Terminus Power Project No. 3947. The project is located on the Kaweah River in Tulare County, California and uses surplus water from the U.S. Army Corps of Engineer's Terminus Dam.
The applicants seek Commission approval to transfer the license for the Terminus Power Project from the transferor to the transferee.
Deadline for filing comments, motions to intervene, and protests: 30 days from the date that the Commission issues this notice. The Commission strongly encourages electronic filing. Please file comments, motions to intervene, and protests using the Commission's eFiling system at
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA) has submitted an information collection request (ICR), NESHAP for Stationary Reciprocating Internal Combustion Engines (EPA ICR Number 1975.11, OMB Control Number 2060-0548), to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act. This is a proposed extension of the ICR, which is currently approved through April 30, 2020. Public comments were previously requested, via the
Additional comments may be submitted on or before March 30, 2020.
Submit your comments, referencing Docket ID Number EPA-HQ-OECA-2013-0340, to: (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change, including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI), or other information whose disclosure is restricted by statute.
Patrick Yellin, Monitoring, Assistance, and Media Programs Division, Office of Compliance, Mail Code 2227A, Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460; telephone number: (202) 564-2970; fax number: (202) 564-0050; email address:
Supporting documents, which explain in detail the information that the EPA will be collecting, are available in the public docket for this ICR. The docket can be viewed online at
In general, all NESHAP standards require initial notifications, performance tests, and periodic reports by the owners/operators of the affected facilities. They are also required to maintain records of the occurrence and duration of any startup, shutdown, or malfunction in the operation of an affected facility, or any period during which the monitoring system is inoperative. These notifications, reports, and records are essential in determining compliance, and are required of all affected facilities subject to NESHAP.
Environmental Protection Agency (EPA).
Notice.
The Environmental Protection Agency (EPA) has submitted an information collection request (ICR), Water Quality Certification Regulations (EPA ICR No. 2603.03, OMB Control No. 2040-0295) to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act (PRA). This is a proposed revision of an ICR, which is currently approved through February 29, 2020. Public comments were previously requested via the
Additional comments may be submitted on or before March 30, 2020.
Submit your comments, referencing Docket ID Number EPA-HQ-OW-2019-0566, to (1) EPA online using
EPA's policy is that all comments received will be included in the public docket without change including any personal information provided, unless the comment includes profanity, threats, information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute.
Lauren Kasparek, Oceans, Wetlands, and Communities Division, Office of Wetlands, Oceans, and Watersheds, (MC 4504T), Environmental Protection Agency, 1200 Pennsylvania Ave. NW, Washington, DC 20460; telephone number: (202) 564-3351; email address:
Supporting documents, which explain in detail the information that the EPA will be collecting, are available in the public docket for this ICR. The docket can be viewed online at
Section 309(a) of the Clean Air Act requires that EPA make public its comments on EISs issued by other Federal agencies. EPA's comment letters on EISs are available at:
Environmental Protection Agency (EPA).
Notice of availability.
The Environmental Protection Agency (EPA) is announcing the availability of a web portal that allows the public to search for agency guidance documents. The purpose of this portal is to increase transparency of EPA guidance documents and to provide a mechanism for the public to request modification or withdrawal of such documents.
This web portal is available on or about February 28, 2020.
The web portal is available via the internet at
Mary Manibusan, Office of Policy (1803A), Environmental Protection Agency, 1200 Pennsylvania Ave NW, Washington, DC 20460; telephone number: (202) 564-7267; fax number: (202) 564-8601; email address:
On October 9, 2019, the President signed Executive Order (E.O.) 13891, “Promoting the Rule of Law Through
Today's notice provides announcement of public access to the EPA Guidance Portal, allowing for the search of active guidance documents as defined under E.O. 13891. Guidance documents listed on the EPA Guidance Portal do not construe any obligations or binding requirements on regulated parties, nor threat of enforcement action if the regulated public does not comply. The EPA Guidance Portal comports with all statutory and Federal web policies. Information available about each guidance document listed on the EPA Guidance Portal includes:
• A concise name for the guidance document;
• The date on which the guidance document was issued;
• The date on which the guidance document was posted to the web portal
• An agency unique identifier;
• A hyperlink to the guidance document;
• The general topic addressed by the guidance document; and
• A summary of the guidance document's content.
EPA intends to augment its list of guidance documents on the EPA Guidance Portal as additional such documents become available that the agency may cite, use, or rely upon. Similarly, should EPA determine that a guidance document should be modified or withdrawn, these documents shall be updated or removed as appropriate.
The Commission hereby gives notice of the filing of the following agreements under the Shipping Act of 1984. Interested parties may submit comments, relevant information, or documents regarding the agreements to the Secretary by email at
Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA).
Notice.
Under the provisions of the Paperwork Reduction Act, the Regulatory Secretariat Division has submitted to the Office of Management and Budget (OMB) a request to review and approve a revision and renewal of a previously approved information collection requirement regarding reporting purchases from sources outside the United States.
Submit comments on or before March 30, 2020.
Submit comments regarding this burden estimate or any other aspect of this collection of information, including suggestions for reducing this burden to: Office of Information and Regulatory Affairs of OMB, Attention: Desk Officer for GSA, Room 10236, NEOB, Washington, DC 20503 or at
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Zenaida Delgado, Procurement Analyst, at telephone 202-969-7207, or
A.
This clearance covers the information that offerors must submit to comply with the Federal Acquisition Regulation (FAR) provision 52.225-18, Place of Manufacture. This provision requires offerors of manufactured end products to provide information as to whether the offered end products are predominantly manufactured in the United States or outside the United States.
Contracting officers use the information as the basis for entry into the Federal Procurement Data System for further data on the rationale for purchasing foreign manufactured items. The data is necessary for analysis of the application of the Buy American statute and the trade agreements.
A. A 60-day notice was published in the
Office of Human Resources Management (OHRM), General Services Administration (GSA).
Notice.
Notice is hereby given of the appointment of new members to the General Services Administration Senior Executive Service Performance Review Board. The Performance Review Board assures consistency, stability, and objectivity in the performance appraisal process.
Ms. Shonna James, Director, Executive Resources HR Services Center, Office of Human Resources Management, General Services Administration, 1800 F Street NW, Washington, DC 20405, 202-230-7005.
Section 4314 (c) (1) through (5) of title 5 U.S.C requires each agency to establish, in accordance with regulation prescribed by the Office of Personnel Management, one or more SES performance review board(s). The board is responsible for making recommendations to the appointing and awarding authority on the performance appraisal ratings and performance awards for employees in the Senior Executive Service.
The following have been designated as members of the Performance Review Board of GSA:
• Allison Azevedo, Acting Deputy Commissioner, Public Buildings Service.
• Allison Brigati, Deputy Administrator—PRB Chair.
• Giancarlo Brizzi, Regional Commissioner, Public Buildings Service, Greater Southwest Region.
• Tiffany Hixson, Regional Commissioner, Federal Acquisition Service, Northwest, Arctic Region.
• Thomas Howder, Deputy Commissioner, Federal Acquisition Service.
• Merrick Krause, Acting Chief Human Capital Officer, Office of Human Resources Management.
• Jeffrey Lau, Regional Commissioner, Federal Acquisition Service, Northeast and Caribbean Region.
• Jessica Salmoiraghi, Associate Administrator for Governmentwide Policy.
• Jack St. John, General Counsel.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing effort to reduce public burden and maximize the utility of government information, invites the general public and other Federal agencies the opportunity to comment on a proposed and/or continuing information collection, as required by the Paperwork Reduction Act of 1995. This notice invites comment on a proposed information collection project titled Understanding Long-term Respiratory Morbidity in Former Styrene-Exposed Workers. The purpose of the interviews and medical testing is to determine the prevalence of respiratory symptoms and lung function abnormalities among a cohort of former styrene-exposed workers with different exposure levels to evaluate the long-term impacts of styrene exposure on the respiratory system.
CDC must receive written comments on or before April 28, 2020.
You may submit comments, identified by Docket No. CDC-2020-0022 by any of the following methods:
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•
To request more information on the proposed project or to obtain a copy of the information collection plan and instruments, contact Jeffrey M. Zirger, Information Collection Review Office,
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. In addition, the PRA also requires Federal agencies to provide a 60-day notice in the
The OMB is particularly interested in comments that will help:
1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
2. Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
3. Enhance the quality, utility, and clarity of the information to be collected; and
4. Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
5. Assess information collection costs.
Understanding Long-term Respiratory Morbidity in Former Styrene-Exposed Workers—New—National Institute for Occupational Safety and Health (NIOSH), Centers for Disease Control and Prevention (CDC).
Styrene is used in the production of automobile parts, boats, computer housings, food containers, wind energy components, and many other products. An estimated 90,000 U.S. workers are potentially exposed to styrene at more than 5,000 U.S. manufacturing plants. Occupational exposure to styrene has been associated with deleterious health effects, including changes in color vision, mucous membrane irritation, hearing loss, and neurocognitive impairment. Workplace exposure to styrene has also been associated with cases of non-malignant respiratory disease (NMRD), including COPD and obliterative bronchiolitis. However, little is understood about the long-term respiratory effects on styrene-exposed workers. NIOSH is requesting a three year OMB approval.
The goal of this project is to understand the prevalence of long-term respiratory morbidity in styrene-exposed workers. The objectives of the proposed study are: (1) To characterize work exposures by acquiring job histories and comparing with historical exposure levels obtained from a past industrial hygiene survey, (2) to examine prevalence of respiratory morbidity by duration and level of styrene exposure and other characteristics, (3) to apply research biomarkers of lung injury to a styrene-exposed workforce, and (4) to describe the prevalence of color vision impairment with the presence of respiratory morbidity. Our hypothesis is that workers previously exposed to high concentrations of styrene (≥5 ppm), even those with short tenure (<1 year), will have a higher prevalence of respiratory symptoms and lung function abnormalities compared with workers exposed to low concentration of styrene (<5 ppm).
We will conduct face-to-face interviews with members of a cohort of workers from two reinforced plastic boatbuilding plants that closed in 1989 and 1993. The purpose of the interviews is to collect demographic information, detailed job history during and after the worker's tenure at the boatbuilding plant, upper and lower respiratory symptoms, physician diagnoses of respiratory diseases, cigarette smoking history, and medication use. A NIOSH employee will conduct the interviews. We will also conduct several lung function tests including: Exhaled nitric oxide, impulse oscillometry, multiple-breath washout, spirometry, bronchodilator reversibility testing, and high-resolution computed tomography (HRCT) scan.
The purpose of the lung function testing is to identify small and large airway abnormalities that are consistent with NMRD. With the exception of the HRCT scans, NIOSH technicians will perform the lung function testing. An accredited imaging center will be hired to perform the HRCT scans. We will collect blood to analyze for biomarkers associated with lung injury caused by obliterative bronchiolitis. A NIOSH phlebotomist will collect the blood samples. Finally, we will assess cohort members for color vision abnormalities using the Lanthony D-15 Color Test. Color vision assessment will be completed by a NIOSH technician. The total estimated burden hours are 1,449. There are no costs to respondents other than their time.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing effort to reduce public burden and maximize the utility of government information, invites the general public and other Federal agencies the opportunity to comment on a proposed and/or continuing information collection, as required by the Paperwork Reduction Act of 1995. This notice invites comment on a proposed information collection project titled “Delta Impact Cooperative Agreement Evaluation Data Collection Instruments”, to collect information from recipients related to program evaluation activities for cooperative agreement CDC-RFA-CE18-1801: Domestic Violence Prevention Enhancement and Leadership Through Alliances (DELTA) Impact.
Written comments must be received on or before April 28, 2020.
You may submit comments, identified by Docket No. CDC-2020-0023 by any of the following methods:
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Submit all comments through the Federal eRulemaking portal (
To request more information on the proposed project or to obtain a copy of the information collection plan and instruments, contact Jeffrey M. Zirger, Information Collection Review Office, Centers for Disease Control and Prevention, 1600 Clifton Road NE, MS-D74, Atlanta, Georgia 30329; phone: 404-639-7570; Email:
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. In addition, the PRA also requires Federal agencies to provide a 60-day notice in the
The OMB is particularly interested in comments that will help:
1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
2. Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
3. Enhance the quality, utility, and clarity of the information to be collected; and
4. Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
5. Assess information collection costs.
Delta impact Cooperative Agreement Evaluation Data Collection Instruments—New—National Center for Injury Prevention and Control (NCIPC), Centers for Disease Control and Prevention (CDC).
The Centers for Disease Control and Prevention (CDC) seeks OMB approval for three years for a new information collection request to collect information from all 10 recipients (State Domestic Violence Coalitions) and all 17 subrecipients (Coordinated Community Response teams) funded through CDC's Domestic Violence Prevention Enhancements and Leadership Through Alliances (DELTA) Impact Program cooperative agreement (NOFO CDC-RFA-CE18-1801). CDC will collect information from DELTA Impact recipients as part of its program evaluation to assess the implementation and impact of the NOFO and further understand the facilitators, barriers, and critical factors to implement specific violence prevention strategies and conduct program evaluation activities.
The findings from this data collection will be used for implementing and evaluating DELTA Impact prevention efforts, and will inform technical assistance provided to recipients to assist them in achieving the goals of the DELTA Impact program. This data collection will supplement other data to highlight recipient and subrecipients' experiences implementing their primary prevention efforts to prevent intimate partner violence and their related program evaluation activities. CDC requests approval for 47 burden hours annually. There is no cost to respondents other than their time.
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing effort to reduce public burden and maximize the utility of government information, invites the general public and other Federal agencies the opportunity to comment on a proposed and/or continuing information collection, as required by the Paperwork Reduction Act of 1995. This notice invites comment on a proposed information collection project titled “Distribution of Traceable Opioid Material* Kits (TOM Kits*) across U.S. Laboratories.” CDC will use a brief web-based survey to collect information from laboratories submitting requests for TOM Kits*. CDC will use this information to prioritize which laboratories will receive kits when quantities are limited.
* TRACEABLE OPIOID MATERIAL, TOM KITS, and the TOM KITS logo are marks of the U.S. Department of Health and Human Services.
CDC must receive written comments on or before April 28, 2020.
You may submit comments, identified by Docket No. CDC-2020-0025 by any of the following methods:
•
•
Submit all comments through the Federal eRulemaking portal (
To request more information on the proposed project or to obtain a copy of the information collection plan and instruments, contact Jeffrey M. Zirger, Information Collection Review Office, Centers for Disease Control and Prevention, 1600 Clifton Road NE, MS-D74, Atlanta, Georgia 30329; phone: 404-639-7570; Email:
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. In addition, the PRA also requires Federal agencies to provide a 60-day notice in the
The OMB is particularly interested in comments that will help:
1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
2. Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
3. Enhance the quality, utility, and clarity of the information to be collected; and
4. Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
5. Assess information collection costs.
Distribution of Traceable Opioid Material* Kits (TOM Kits*) across U.S. Laboratories—NEW—National Center for Environmental Health (NCEH), Centers for Disease Control and Prevention (CDC).
For the first time in U.S. history, a drug class has been declared a national public health emergency; each day more than 140 Americans die from drug overdoses, 91 specifically because of opioids. Since 2013, there have been significant increases in overdose deaths involving synthetic opioids—particularly those involving illicitly-manufactured fentanyl. The U.S. Drug Enforcement Administration (DEA) estimates that 75 percent of all opioid identifications are illicit fentanyls. Laboratories are routinely asked to confirm which fentanyl or other opioids
The Centers for Disease Control and Prevention (CDC) is leading the development of Traceable Opioid Material* Kits (TOM Kits*) to support detection of emerging opioids. CDC maintains the contents of the TOM Kits* based on new needs identified, in part, through DEA Emerging Threat Reports. The DEA 2018 mid-year data indicate that fentanyl and fentanyl-related compounds account for approximately 75 percent of their opioid identifications. These kits are reference materials and do not eliminate the need to meet analytical method requirements of other federal agencies. TOM Kits* are not intended for diagnostic use. The kits are free to laboratories in the public, private, clinical, law enforcement, research, and public health domains.
To equitably distribute these TOM Kits*, the CDC conducted an emergency information collection, titled “Distribution of Traceable Opioid Material* Kits (TOM Kits*) across U.S. Laboratories,” under the Health and Human Services (HHS) Secretary's Public Health Emergency Paperwork Reduction Act (PHE PRA) Waiver mechanism for the period from 03/20/2019 to 05/10/2019. From 05/10/2019, CDC continued distributing kits using a generic information collection (GenIC) under “Generic Clearance for the Collection of Qualitative Feedback on Agency Service Delivery” (OMB Control No. 0923-0047; expiration date 01/31/2022). To continue this collection, the CDC is currently requesting a three-year PRA clearance for a new information collection request (ICR) under the same title.
CDC is currently distributing a product line of TOM Kits*. Examples of products in this line include the: (1) Opioid Certified Reference Material Kit (Opioid CRM Kit); and (2) Fentanyl Analog Screening Kit (FAS Kit). Respondent laboratories requesting the TOM Kits* can be from any sector (academic, public, or private), must be located in the U.S., must have a verifiable business address, must have a current DEA registration, must comply with respective state and local regulations, and must submit requests directly to the respective vendor.
As the number of laboratories requesting TOM Kits* is high, the information collection will be used to prioritize which laboratories will receive kits when quantities are limited. The brief six-minute web-based survey will allow the CDC to (1) determine what service the recipient laboratory performs and the volume of samples the laboratory processes, and to (2) equitably distribute TOM Kits* based on the analysis techniques, matrix, and sample size used by the recipient laboratory.
The annual number of respondents (n=1,200) was based on the number of 2019 requests. The total time burden requested is 120 hours per year. There is no burden on the respondents other than their time.
*TRACEABLE OPIOID MATERIAL, TOM KITS, and the TOM KITS logo are marks of the U.S. Department of Health and Human Services.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meeting.
The meeting will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended, and the Determination of the Director, Strategic Business Initiatives Unit, Office of the Chief Operating Officer, CDC, pursuant to Public Law 92-463. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
The Director, Strategic Business Initiatives Unit, Office of the Chief Operating Officer, Centers for Disease Control and Prevention, has been delegated the authority to sign
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice of meeting.
In accordance with the Federal Advisory Committee Act, the CDC announces the following meeting for the Clinical Laboratory Improvement Advisory Committee (CLIAC). This meeting is open to the public, limited only by the space available. The meeting room accommodates approximately 100 people. The public is also welcome to view the meeting by webcast. Check the CLIAC website on the day of the meeting for the webcast link
The meeting will be held on April 16, 2020, 8:30 a.m. to 5:00 p.m., EDT and April 17, 2020, 8:30 a.m. to 11:30 a.m., EDT.
Food and Drug Administration (FDA), White Oak Campus, 10903 New Hampshire Avenue, Building 31, Great Room, Silver Spring, Maryland 20993 and via webcast at
Nancy Anderson, MMSc, MT(ASCP), Senior Advisor for Clinical Laboratories, Division of Laboratory Systems, Center for Surveillance, Epidemiology and Laboratory Services, Office of Public Health Scientific Services, Centers for Disease Control and Prevention, 1600 Clifton Road NE, Mailstop V24-3, Atlanta, Georgia 30329-4018, telephone (404) 498-2741;
All people attending the CLIAC meeting in-person are required to register for the meeting online at least five business days in advance for U.S. citizens and at least 10 business days in advance for international registrants. Register at:
It is the policy of CLIAC to accept written public comments and provide a brief period for oral public comments on agenda items. Public comment periods for each agenda item are scheduled immediately prior to the Committee discussion period for that item. In general, each individual or group requesting to make oral comments will be limited to a total time of five minutes (unless otherwise indicated). To assure adequate time is scheduled for public comments, speakers should notify the contact person below at least 5 business days prior to the meeting date. For individuals or groups unable to attend the meeting, CLIAC accepts written comments until the date of the meeting (unless otherwise stated). However, it is requested that comments be submitted at least 5 business days prior to the meeting date so that the comments may be made available to the Committee for their consideration and public distribution. Written comments should be provided to the contact person at the mailing or email address below, and will be included in the meeting's Summary Report.
The CLIAC meeting materials will be made available to the Committee and the public in electronic format (PDF) on the internet instead of by printed copy. Check the CLIAC website on the day of the meeting for materials:
The Director, Strategic Business Initiatives Unit, Office of the Chief Operating Officer, Centers for Disease Control and Prevention, has been delegated the authority to sign
Centers for Disease Control and Prevention (CDC), Department of Health and Human Services (HHS).
Notice with comment period.
The Centers for Disease Control and Prevention (CDC), as part of its continuing effort to reduce public burden and maximize the utility of government information, invites the
CDC must receive written comments on or before April 28, 2020.
You may submit comments, identified by Docket No. CDC-2020-0015 by any of the following methods:
•
•
To request more information on the proposed project or to obtain a copy of the information collection plan and instruments, contact Jeffrey M. Zirger, Information Collection Review Office, Centers for Disease Control and Prevention, 1600 Clifton Road NE, MS-D74, Atlanta, Georgia 30329; phone: 404-639-7570; Email:
Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520), Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. In addition, the PRA also requires Federal agencies to provide a 60-day notice in the
The OMB is particularly interested in comments that will help:
1. Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
2. Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
3. Enhance the quality, utility, and clarity of the information to be collected; and
4. Minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology,
5. Assess information collection costs.
2021 and 2023 National Youth Risk Behavior Surveys (OMB Contrtol No. 0920-0493)—Reinstatement with change—National Center for HIV/AIDS, Viral Hepatitis, STD, and TB Prevention (NCHHSTP), Centers for Disease Control and Prevention (CDC).
The purpose of this request is to obtain OMB approval to reinstate with change, the data collection for the National Youth Risk Behavior Survey (YRBS), a school-based survey that has been conducted biennially since 1991. OMB approval for the 2017 YRBS and 2019 YRBS expired September 30, 2019 (OMB Control No. 0920-0493). CDC seeks a three-year approval to conduct the YRBS in Spring 2021 and Spring 2023. Minor changes incorporated into this reinstatement request include: An updated title for the information collection to accurately reflect the years in which the survey will be conducted, minor changes to the data collection instrument, and the use of a tablet-based data collection methodology starting in 2023.
The YRBS assesses priority health risk behaviors related to the major preventable causes of mortality, morbidity, and social problems among both youth and young adults in the United States. Data on health risk behaviors of adolescents are the focus of approximately 65 national health objectives in Healthy People 2030, an initiative of the U.S. Department of Health and Human Services (HHS). The YRBS provides data to measure 13 of the proposed health objectives and one of the Leading Health Indicators currently under public comment to establish Healthy People 2030 objectives. In addition, the YRBS can identify racial and ethnic disparities in health risk behaviors. No other national source of data measures as many of the Healthy People 2030 objectives addressing adolescent health risk behaviors as the YRBS. The data also will have significant implications for policy and program development for school health programs nationwide.
In Spring 2021 and Spring 2023, the YRBS will be conducted among nationally representative samples of students attending public and private schools in grades 9-12. Information supporting the YRBS also will be collected from state-, district-, and school-level administrators and teachers. The table below reports the number of respondents annualized over the three-year project period. There are no costs to respondents except their time. The total estimated annualized burden hours are 6,259.
Office of Planning, Research, and Evaluation; Administration for Children and Families; HHS.
Request for public comment.
A goal of the Performance Measures and Adulthood Preparation Subjects (PMAPS) studies is to collect, analyze, and report on performance measure data for the Personal Responsibility Education Program (PREP) programs. The Office of Planning, Research, and Evaluation (OPRE) and the Family and Youth Services Bureau (FYSB) in the Administration for Children and Families (ACF) request a revision to a currently approved information collection (OMB No. 0970-0497; expiration date: 04/30/2020). The purpose of the request is to make adaptions to the participant entry and exit surveys, and continue the ongoing data collection of the performance measures from PREP grantees.
Copies of the proposed collection of information can be obtained and comments may be forwarded by emailing
This request includes the development of adapted participant entry and exit surveys for middle school students (6th, 7th, and 8th grade youth) that exclude the most sensitive questions pertaining to sexual behavior. This is because some of the PREP middle school curricula do not include topics on sexual behavior,
Sec. 50503, Pub. L. 115-123.
Office of Family Assistance; Administration for Children and Families; HHS.
Request for public comment.
Form ACF-196T is used by tribes to report expenditures for the Tribal Temporary Assistance for Needy Families (TANF) grant. The Administration for Children and Families (ACF) will use the financial data provided by tribes to estimate quarterly funding needs, calculate award amounts, and assess compliance with statutory and regulatory requirements. ACF is requesting an extension with no changes to the form and minor updates to the instructions.
Written comments and recommendations for the proposed information collection should be sent directly to the following: Office of Management and Budget, Paperwork Reduction Project, Email:
Copies of the proposed collection may be obtained by emailing
U.S.C. Section 402 of the Social Security Act (42 U.S.C. 602).
Office of Refugee Resettlement; Administration for Children and Families; HHS.
Request for public comment.
The Office of Refugee Resettlement (ORR) is requesting a 3-year extension of the application and Withdrawal of Application or Declination of Placement Form for the Unaccompanied Refugee Minors (URM) Program. Proposed revisions to each instrument are minimal. These forms were previously approved under OMB #0970-0498, expiration 7/31/2020. ORR is currently seeking a new OMB number specific to these forms, as they were previously approved as part of another information collection package for ORR's Unaccompanied Alien Children's program.
Copies of the proposed collection of information can be obtained and comments may be forwarded by emailing
8 U.S.C. 1522(d).
Health Resources and Service Administration (HRSA), Department of Health and Human Services (HHS).
Notice.
In accordance with the Federal Advisory Committee Act (FACA), HHS is hereby giving notice that the National Advisory Council on the National Health Service Corps (NACNHSC) Charter is amended. The effective date is February 20, 2020.
Diane Fabiyi-King, Designated Federal Official (DFO), Division of National Health Service Corps (NHSC), HRSA. Address: 5600 Fishers Lane, Room 14N110, Rockville, Maryland 20857; phone (301) 443-3609; or email
The NACNHSC consults, advises, and makes annual recommendations to the Secretary of HHS and the Administrator, HRSA, with respect to their NHSC related responsibilities under Subpart II, Part D of Title III of the PHS Act (42 U.S.C. 254d-254k), as amended, to designate areas of the United States with health professional shortages and assign NHSC clinicians to improve the delivery of health services in health professional shortage areas.
The amended charter for NACNHSC was approved on February 20, 2020, which will also stand as the filing date. NACNHSC is exempt from Section 14 of the FACA, as stated in section 337(c) of the Public Health Service (PHS) Act. This amended charter will remain in effect until amended or section 337 of the PHS Act is repealed by law.
A copy of the NACNHSC amended charter is available on the NACNHSC website at
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Pursuant to section 10(d) of the Federal Advisory Committee Act, as amended, notice is hereby given of the following meetings.
The meetings will be closed to the public in accordance with the provisions set forth in sections 552b(c)(4) and 552b(c)(6), Title 5 U.S.C., as amended. The grant applications and the discussions could disclose confidential trade secrets or commercial property such as patentable material, and personal information concerning individuals associated with the grant applications, the disclosure of which would constitute a clearly unwarranted invasion of personal privacy.
This notice is being published less than 15 days prior to the meeting due to the timing limitations imposed by the review and funding cycle.
Pursuant to Public Law 92-463, notice is hereby given that the Substance Abuse and Mental Health Services Administration's (SAMHSA) Center for Substance Abuse Treatment (CSAT) National Advisory Council (NAC) will meet on March 26, 2020, 1:00 p.m.-5:00 p.m. (EDT).
The meeting is open to the public and will include consideration of the minutes from the SAMHSA CSAT NAC meeting of August 21, 2019; budget update; DATA wavier update; State Opioid Response update; Substance Abuse Prevention and Treatment Block Grant update; discretionary portfolio update; discussion on Tip 63; and a discussion on Technology Transfer Centers Program Peer Support.
The meeting will be held via WebEx and telephone only, and not in person. Interested persons may present data, information, or views, orally or in writing, on issues pending before the Council. Written submissions should be forwarded to the contact person on or before March 20, 2020. Oral presentations from the public will be scheduled at the conclusion of the meeting. Individuals interested in making oral presentations must notify the contact person on or before March 20, 2020. Up to five minutes may be allotted for each presentation.
Registration is required to participate during this meeting. To attend virtually, or to obtain the call-in number and access code, submit written or brief oral comments, or request special accommodations for persons with
Meeting information and a roster of Council members may be obtained by accessing the SAMHSA Committee website at
U.S. Customs and Border Protection (CBP), Department of Homeland Security.
60-Day notice and request for comments; extension of an existing collection of information.
The Department of Homeland Security, U.S. Customs and Border Protection will be submitting the following information collection request to the Office of Management and Budget (OMB) for review and approval in accordance with the Paperwork Reduction Act of 1995 (PRA). The information collection is published in the
Comments are encouraged and must be submitted (no later than April 28, 2020) to be assured of consideration.
Written comments and/or suggestions regarding the item(s) contained in this notice must include the OMB Control Number 1651-0083 in the subject line and the agency name. To avoid duplicate submissions, please use only
(1)
(2)
Requests for additional PRA information should be directed to Seth Renkema, Chief, Economic Impact Analysis Branch, U.S. Customs and Border Protection, Office of Trade, Regulations and Rulings, 90 K Street NE, 10th Floor, Washington, DC 20229-1177, Telephone number 202-325-0056 or via email
CBP invites the general public and other Federal agencies to comment on the proposed and/or continuing information collections pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
This collection of information is provided for by 19 CFR 10.224. CBP Form 450 is accessible at
Federal Emergency Management Agency, DHS.
Notice and request for comments.
The Federal Emergency Management Agency, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public to take this opportunity to comment on a reinstatement, without change, of a previously approved information collection for which approval has expired. In accordance with the Paperwork Reduction Act of 1995, this notice seeks comments on the collection of information related to disaster program accounts and debts owed to FEMA by individuals.
Comments must be submitted on or before April 28, 2020.
To avoid duplicate submissions to the docket, please use only one of the following means to submit comments:
(1)
(2)
All submissions received must include the agency name and Docket ID. Regardless of the method used for submitting comments or material, all submissions will be posted, without change, to the Federal eRulemaking Portal at
You may contact the Information Management Division for copies of the proposed collection of information at email address:
Under the Debt Collection Act as amended (31 U.S.C. 3701, et seq.), the Federal Claims Collection Standards (31 CFR parts 900-904), and the Department of Homeland Security (DHS) regulations (6 CFR Part 11); the Administrator of the Federal Emergency Management Agency (FEMA) is: (1) Required to attempt collection of all debts owed to the United States arising out of activities of the FEMA; and (2) for debts not exceeding $100,000, authorized to compromise such debts or terminate collection action completely where it appears that no person is liable for such debt or has the present or prospective financial ability to pay a significant sum or that the cost of collecting such debt is likely to exceed the amount of the recovery (31 U.S.C. 3711(a)(2)).
This proposed information collection previously published in the
Comments may be submitted as indicated in the
Office of the Assistant Secretary for Public and Indian Housing, HUD.
Notice.
This notice provides updated Administrative Guidelines (Guidelines) and requirements for Project-Based Voucher (PBV) Subsidy Layering Reviews (SLRs), to include new PBV Housing Assistance Payments (HAP) contract terms provisions, as amended by the Housing Opportunity Through Modernization Act of 2016 (HOTMA),
Miguel A. Fontanez Sanchez, Director, Housing Voucher Financial Management Division, telephone number 202-402-4212 or Belinda Bly, Supervisor, Urban Revitalization Division, telephone number 202-402-4104 (neither are toll-free numbers). Addresses for both: c/o Office of Public and Indian Housing, Department of Housing and Urban Development, 451 7th Street SW, Washington, DC 20410. Individuals with speech or hearing impairments may access this number through TTY by calling the Federal Relay Service at 800-877-8339 (this is a toll-free number).
In support of HUD's mission to create quality affordable housing, HUD provides funding assistance to incentivize affordable housing development. Subsidy layering reviews (SLRs) are undertaken to ensure the amount of assistance provided by HUD is not more than necessary to make the PBV project feasible in consideration of all other governmental assistance. SLRs prevent excessive public assistance that could result when a development proposes combining (layering) the HAP subsidy from the PBV program with other public assistance from Federal, State, or local agencies, including assistance through tax concessions or credits.
SLRs for PBV assistance are required pursuant to Section 8(o)(13) of the U.S. Housing Act of 1937 (42 U.S.C. 1437f(o)(13)); section 2835(a)(1)(M)(i) of the Housing and Economic Recovery Act of 2008 (HERA); and section 102 of the Department of Housing and Urban Development Reform Act of 1989. SLRs are only for proposed PBV new construction and rehabilitation projects prior to the execution of an Agreement to Enter into Housing Assistance Payments Contract (AHAP).
SLR requirements are not applicable to existing housing.
Pursuant to 24 CFR 983.55, public housing agencies (PHAs) must submit a request for an SLR for a proposed PBV project when the project includes other governmental assistance. HUD can perform the SLRs in all cases; however, HUD has also delegated authority to participating Housing Credit Agencies (HCAs) as defined herein when the other governmental assistance includes Low-Income Housing Tax Credits (LIHTC).
When a PHA selects a project that is either new construction or rehabilitation, as defined in 24 CFR 983.3, for a PBV award, and the project will include forms of governmental assistance other than PBVs, the PHA must request an SLR. PHAs request an SLR through their local HUD Field Office or, if eligible, through a participating HCA. A list of participating HCAs is posted and updated periodically on the Housing Voucher Financial Management Division (FMD) website, found at:
The PHA is responsible for collecting all required documentation for the SLR from the project owner. A list of all the required documentation is included in Appendix A. If after the initial submission new information becomes available, the PHA is responsible for submitting updated information to HUD or the HCA. The PHA maintains a project file with a complete set of the required documents. As part of the project selection process and application for PBVs, the project owner must disclose all HUD and/or other Federal, State, or local governmental assistance committed to the project, as well as other governmental assistance, using Form HUD 2880 (even if no other governmental assistance is received or is anticipated). If PBV is the only governmental assistance, an SLR is not required. Whether the PHA or HCA performs the SLR, the PHA must confirm that no form of disclosed assistance renders the project ineligible for PBV assistance and does not violate 24 CFR 983.54.
The PHA must inform the owner if any information changes during the application process, either by the addition or deletion of other governmental assistance, the project owner must provide revised information to correct the earlier submissions to reflect the new information. If at any time (either during the application process, after AHAP execution, or after HAP execution) the owner receives supplemental HUD or new governmental assistance for the project that results in an increase in project financing in an amount equal to or greater than 10 percent of the approved SLR development budget, the owner must submit such changes to the PHA and the PHA must notify HUD or the HCA.
Completion of an environmental review and environmental approval is required before an AHAP can be executed, pursuant to 24 CFR 983.153. At the time of initial submission of the SLR request, the PHA submits evidence that a request for a 24 CFR part 58 review is submitted to the responsible entity or a 24 CFR part 50 review is submitted to the Field Office.
When undertaking an SLR, HUD reviews both the development and operating costs of a project to determine whether costs are within a reasonable range, taking into consideration the project's size, characteristics, location, costs, financing and risk factors. Costs that fall within acceptable safe harbor standards, as identified below, may move forward without further justification. If costs exceed safe harbor standards, then additional justification and documentation are required to justify the costs based on risk factors, and HUD approval is required.
If the review is by an HCA, project costs exceeding the safe harbor standards must be consistent with the HCA's published qualified allocation plan.
(A)
i.
ii.
(B)
The maximum initial term for a PBV HAP contract is 20 years pursuant to section 8(o)(13)(F) of the 1937 Housing Act as recently amended by HOTMA, although the initial terms for other funding sources may be less. SLR requests must include an operating pro forma that reflects each year of the HAP contract initial term. All assumptions for income, expenses and debt must be clearly identified. Both the Debt Coverage Ratio (DCR) and cash flow are analyzed on a year-by-year basis. If a project has no debt, the SLR review is processed based only on cash-flow requirements, as described below in 6(C)(ii).
i.
• Net operating income is defined as total operating income minus total operating expenses. The net operating income for a project must cover all repayable debt over the life of the HAP contract.
• Operating expenses should be trended at a consistent fixed rate between 1% and 3% per year for the first 5 years and 3% thereafter. Justification for increases above 3% must be provided.
• Rent increases should be trended yearly at a consistent fixed rate between 2% and 3% per year. Justification is required for increases outside this range.
• Vacancy rates must not exceed 7%.
• Debt service is defined as the funds required to make payments on all non-forgivable loans, including any existing debt on the property. Debt service does not include forgivable/soft loans, non-repayable grants, non-repayable federal, state or local assistance, deferred developer fees, financing fees, partnership fees, management fees, capital contributions, tax concessions, or tax credits.
If the projected DCR remains between 1.10 and 1.45 during the initial term of the HAP contract, then it is assumed the project has enough cash-flow to pay operating expenses and amortized debt, and that the amount of government assistance is not excessive. HUD will require adjustments if the projected DCR in any one year falls below 1.10 and it continues to remain below 1.10 for a series of subsequent years as cash flow would not be enough to ensure stable operations. Likewise, HUD will require adjustments to PBV assistance, if the projected DCR exceeds the maximum of 1.45 in any one year and continues to remain above 1.45 for a series of subsequent years.
ii.
• If all or a portion of the developer fee has been deferred and is owed, the face value amount of the deferred developer fee (
• Operational and replacement reserves may be deducted from cash flow when reserves are adjusted by a consistent amount each year.
• No further adjustments to cash-flow are permitted beyond deferred developer fees, operational reserve contributions and replacement reserve contributions.
If in any given year the annual cash-flow is greater than 10% of total operating expenses and it remains above 10%, it is assumed the cash generated from the government assistance is greater than is necessary to make the project feasible. Therefore, adjustments must be made by the project owner to reduce cash flow to 10% or less of operating expenses. If the owner declines, HUD will reduce PBV rents or the number of PBVs, so the project complies with the 10% requirement.
For Mixed-Finance projects that also include PBVs, the SLR is handled as part of the Mixed-Finance project review process without a separate PBV SLR review. SLRs for Mixed-Finance projects are only done by HUD and may not be done by an HCA. Mixed-Finance reviews are done by HUD's Office of Public Housing Investments (OPHI) at HUD Headquarters. This provision also applies to Mixed-Finance projects with PBVs that are undertaken as part of the Choice Neighborhoods Grant Program, as well as Choice Neighborhoods projects that have PBVs, but no public housing. This includes MTW local nontraditional development (LNTD) proposals. OPHI prepares the SLR as part of the project review process without a separate PBV SLR review.
As it relates to the PBVs, Mixed-Finance projects must comply with the SLR standards identified above in the Notice. In addition to this review, the project will also be reviewed to assure compliance with the provisions of 24 CFR 905 Subpart F, and other applicable guidance, including the following:
• The “Cost Control and Safe Harbor Standards for Rental Mixed-Finance Development,” dated April 9, 2003 or any successor document.
• Total Development Cost (TDC) and Housing Construction Cost (HCC) limits imposed on the project, pursuant to HUD Notice PIH-2011-38 or successor notice.
• The HUD Pro Rata Test, which assures that the proportion of HUD public housing funds committed to development of the project does not exceed the proportion of public housing units in the project. For example, if there are 120 units in the project and 50 are public housing, 42% of the units are public housing. Therefore, the amount of public housing funds contributed to the development of the project may not exceed 42% of the development budget, including hard and soft costs.
• HUD will review the amount of LIHTC equity to be invested in the project to ensure that the sale of LIHTCs results in an amount of net tax credit equity that is consistent with amounts generally contributed by investors to similar projects under similar market conditions, and that the amount is not less than 51 cents for each dollar of tax credit allocation awarded to a project. If the project receives 51 cents or less of LIHTC equity or does not receive a market rate of equity, it is subject to additional review to reassess the project's fees and costs.
(A)
If HUD completes the SLR and determines the PBV assistance complies with the standards set in this Notice, where the PBV assistance will not result in excessive government subsidy, HUD will certify compliance pursuant to 24 CFR 4.13 and the local HUD Field Office will notify the PHA in writing.
If HUD completes the SLR and determines that the amount of government subsidy, including the PBV assistance, is excessive, HUD notifies the PHA. The notification includes a recommendation to reduce the amount of PBV assistance or a determination that PBV assistance cannot be provided. Once the PHA receives HUD's decision, the PHA must notify the owner in writing of the outcome and work with the owner to restructure, as needed. Revised materials must then be resubmitted to the HUD Field Office for review.
(B)
If an HCA completes the SLR and determines that PBV assistance complies with the above standards of this notice and does not result in excessive government subsidy, the HCA must notify the PHA and submit a certification to HUD at
If the HCA SLR determines the public assistance amount is excessive, the HCA must notify HUD, in writing, with a copy to the PHA. The notification will include either a recommendation to reduce the amount of PBV assistance or the amount of LIHTC allocation or a determination that PBV assistance cannot be provided. HUD will consult with the HCA and the PHA prior to issuing a final determination to adopt the HCA's recommendation or to revise it. The PHA must notify the owner in writing of the outcome and work with the owner to restructure, as needed. Revised materials must then be resubmitted to the HCA and the HUD Field Office for review.
When a proposal for PBV assistance is contemporaneous with the application for or award of LIHTCs, the required SLR may be fulfilled by the HCA in accordance with IRC section 42(m)(2) review if such review substantially complies with the HUD SLR requirements and guidelines.
(C)
For projects that fail to comply, HUD will notify the PHA, which must (i) work with the owner to restructure the project so it complies with the above standards for Mixed-Finance projects and resubmit the revised documentation to HUD for approval, or (ii) provide sufficient justification to HUD to allow HUD to approve a variation(s) from the above standards.
In accordance with program regulations at 24 CFR 983.55, a PHA may not execute an AHAP contract until after the SLR is completed and approved by HUD or the HCA. The AHAP also may not be executed until there is a completed environmental review (ER) and written approval by the responsible entity or HUD, pursuant to 24 CFR part 50 or Part 58 and PIH Notice 2016-22. The local HUD Field Office must receive the completed SLR and either approve the Request for Release of Funds or complete a Part 50 environmental review prior to notifying the PHA that it may execute the AHAP. The PHA may request an SLR and environmental review simultaneously. The Field Office confirms to the FMD and/or the HCA that the ER process is complete.
If the owner reports to the PHA the addition of any governmental assistance before or during the AHAP contract when no SLR was initially required because the project had not received and did not anticipate receiving governmental assistance, then an SLR is required to be requested by the PHA at the time of the owner's report.
An HCA is ordinarily established for the purpose of allocating and administering the LIHTC program under
Pursuant to the requirements outlined herein, as well as the Memorandum Of Understanding (MOU) between participating HCAs and HUD, HCAs are required to provide notification to the FMD through the FMD mailbox of any SLRs approved on HUD's behalf by no later than 30 days from the date of authorization. Notifications of approval must contain the following documentation:
The following chart summarizes the types of projects that require an SLR, the entity authorized to perform the SLR and the required certification. 102 (d) Certification is the owner's certification of no additional government funding using form HUD 2880.
HUD performs quality control reviews of SLRs performed by participating HCAs by examining the following:
If any required documentation is not provided, or any portion of the review is performed incorrectly, HUD requires appropriate corrective action. When an SLR is performed by an HCA, subsequent approval of the SLR by HUD is not required.
The information collection requirements contained in this notice are currently approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control numbers 2577-0169. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid control number.
PHAs are responsible for collecting information from project owners and assembling it in an SLR request submitted to the local HUD Public Housing Field Office or HCA. SLR requests must contain the following information. Assembly using a binder is recommended. Incomplete submissions will be returned.
The undersigned is a qualified Housing Credit Agency (HCA) as defined under Section 42 of the Internal Revenue Code of 1986 and hereby notifies the United States Department of Housing and Urban Development (HUD) of our intention to conduct subsidy layering reviews (SLRs) pursuant to HUD's requirements for the purpose of ensuring the combination of assistance under the Section 8 Project-Based Voucher (PBV) Program with other federal, state, or local assistance does not result in excessive compensation. By signifying this notice, the undersigned hereby certifies that:
Required personnel reviewed the statutes identified in
The undersigned understands its HCA responsibilities and certifies it will perform SLRs in accordance with all present and future statutory, regulatory and HUD requirements. The undersign acknowledges participation continues unless and until HUD revokes this notice or the undersigned informs HUD, in writing with a 30-day-notice, of its decision to withdraw. Upon HUD approval, the undersigned shall immediately assume the responsibility of performing SLRs.
Transmit signed and dated notice of Intent to Participate as a PDF attachment to Miguel Fontanez at
For purposes of providing of Section 8 Project-Based Voucher (PBV) Assistance authorized pursuant to 42 U.S.C. 8(o)(13), section 2835(a)(1)(M)(i) of the Housing and Economic Recovery Act of 2008 (HERA), section 102 of the Department of Housing and Urban Development Reform Act of 1989, and in accordance with HUD requirements, all of which address the prevention of excess governmental subsidy, I hereby certify that
Transmit signed and dated SLR certification as PDF attachments to Miguel A. Fontanez at
Fish and Wildlife Service, Interior.
Notice of availability; request for comments.
We, the U.S. Fish and Wildlife Service, have received an application from Paulding Wind Farm II, LLC; Paulding Wind Farm III, LLC; and Paulding Wind Farm IV (collectively, the applicant), for an incidental take permit (ITP) under the Endangered Species Act of 1973, as amended, for the Timber Road II, III, and IV Wind Farms project. If approved, the ITP would authorize the incidental take of the Indiana bat and the northern long-eared bat for a 30-year term. The applicant has prepared a draft habitat conservation plan, which is available for public review. We also announce the availability of a draft environmental assessment, which has been prepared in accordance with the requirements of the National Environmental Policy Act. We request public comment on the application and associated documents.
We will accept comments received or postmarked on or before March 30, 2020.
Paper copies of the documents this notice announces will be available at the following libraries: Brumback Library, 215 W Main St., Van Wert, OH 45891; and Paulding County Carnegie Library, 205 S Main St., Paulding, OH 45879.
•
•
Keith Lott, Wildlife Biologist, or Patrice Ashfield, Project Leader, via phone at 614-416-8993, via the Federal Relay Service at 800-877-8339, or via U.S. mail at the U.S. Fish and Wildlife Service, Ohio Ecological Services Office, 4625 Morse Road, Suite 104, Columbus, OH 43230.
We, the U.S. Fish and Wildlife Service (Service), have received an application from Paulding Wind Farm II, LLC; Paulding Wind Farm III, LLC; and Paulding Wind Farm IV (collectively, the applicant), for an incidental take permit (ITP) under the Endangered Species Act (ESA; 16 U.S.C. 1531
The applicant has prepared a draft habitat conservation plan (HCP), which covers the operation of the Timber Road II, III, and IV Wind Farms (project). The project consists of a wind-powered electric generation facility located in an approximately 65,017-acre area in Paulding County, Ohio. The draft HCP describes the following:
1. Permit duration;
2. Covered lands;
3. Covered species;
4. Project description and covered activities;
5. Environmental baseline and affected species;
6. Impact assessment and take authorization request for Indiana bats and northern long-eared bats;
7. Conservation plan, which includes the Biological Goals and Objectives, and measures to avoid, minimize, and mitigate the impact of the taking;
8. Monitoring and adaptive management;
9. Funding assurances;
10. Alternatives to the taking; and
11. Changed and unforeseen circumstances.
Under the National Environmental Policy Act (NEPA; 43 U.S.C. 4321
1. Determine the impacts and formulate alternatives for an EA related to:
a. Issuance of an ITP to the applicant for the take of the Indiana bat and the northern long-eared bat, and
b. Implementation of the associated HCP; and
2. Evaluate the application for ITP issuance, including the HCP, which provides measures to minimize and mitigate the effects of the proposed incidental take of the Indiana bat and the northern long-eared bat.
The project includes 134 wind turbines, with a total energy-generating capacity of 325.8 megawatts (MW). The project was constructed in several phases, during the period 2012-2020. Timber Road II is an operational facility and consists of 55 turbines with a generating capacity of 99 MW. Timber Road III is also an operational facility and consists of 48 turbines with a generating capacity of 100.8 MW. Timber Road IV is anticipated to be operational in 2020; consisting of 31 turbines, it has a generating capacity of 126 MW. The need for the proposed action (
The HCP provides a detailed conservation plan to ensure that the incidental take caused by the operation of the project will not appreciably reduce the likelihood of the survival and recovery of the Indiana bat and northern long-eared bat, and includes
In accordance with NEPA, the Service has prepared a DEA to analyze the impacts to the human environment that would occur if the requested ITP is issued and the associated HCP is implemented.
Section 9 of the ESA prohibits the “taking” of threatened and endangered species. However, provided certain criteria are met, the Service is authorized to issue permits under section 10(a)(1)(B) of the ESA for take of federally listed species when, among other things, such a taking is incidental to, and not the purpose of, otherwise lawful activities. Under the ESA, the term “take” means to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect endangered and threatened species, or to attempt to engage in any such conduct. Our implementing regulations in title 50 of the Code of Federal Regulations (CFR) define “harm” as an act which actually kills or injures wildlife, and such act may include significant habitat modification or degradation that results in death or injury to listed species by significantly impairing essential behavioral patterns, including breeding, feeding, or sheltering (50 CFR 17.3).
The HCP analyzes, and the ITP would authorize, take from killing of bats due to the operation of the project. If issued, the ITP would authorize incidental take consistent with the applicant's HCP and the ITP. To issue the ITP, the Service must find that the application, including the associated HCP, satisfies the criteria of section 10(a)(1)(B) of the ESA and the Service's implementing regulations at 50 CFR part 13 and § 17.22. If the ITP is issued, the applicant would receive assurances under the Service's No Surprises policy, codified at 50 CFR 17.22(b)(5).
The applicant proposes to operate a maximum of 134 wind turbines and associated facilities for a period of 30 years in Paulding County, Ohio. The project consists of wind turbines, associated gravel pads and access roads, underground and above-ground electrical collection circuits, three substations, four permanent un-guyed meteorological towers, and an operations and maintenance facility.
The draft HCP describes the impacts of take associated with the operation of the project and includes measures to avoid, minimize, mitigate, and monitor the impacts of incidental take on the Indiana bat and the northern long-eared bat. The applicant will mitigate for take and associated impacts through one or more methods, including restoration, if necessary, and permanent protection of documented maternity colony habitat and/or swarming habitat, and/or gating of a hibernaculum. Habitat mitigation, including any restored habitat, will occur on private land and be permanently protected by a conservation easement, fee simple acquisition with deed restrictions, or another site protection instrument that provides an equivalent level of protection, and will be approved by the Service. Chapter 5 of the HCP describes the avoidance, minimization measures, and compensatory mitigation that will limit and mitigate for the take of Indiana bats and northern long-eared bats. This chapter also includes the monitoring and adaptive management plans to ensure that the level of take stays within permitted levels and mitigation sites are maintained as suitable habitat for the Indiana bat and northern long-eared bat.
The Service is soliciting information regarding the adequacy of the HCP to avoid, minimize, mitigate, and monitor the proposed incidental take of the covered species and to provide for adaptive management. In compliance with section 10(c) of the ESA (16 U.S.C. 1539(c)), the Service is making the ITP application materials available for public review and comment as described above.
We invite comments and suggestions from all interested parties on the draft documents associated with the ITP application (HCP and HCP appendices), and request that comments be as specific as possible. In particular, we request information and comments on the following topics:
1. Whether adaptive management, mitigation, and monitoring provisions in the proposed action alternative are sufficient;
2. Any threats to the Indiana bat and the northern long-eared bat that may influence their populations over the life of the ITP that are not addressed in the draft HCP or DEA;
3. Any new information on white-nose syndrome effects on the Indiana bat and the northern long-eared bat; and
4. Any other information pertinent to evaluating the effects of the proposed action on the Indiana bat and the northern long-eared bat.
The DEA contains an analysis of four alternatives:
1. No Action alternative, in which the Service would not issue a permit to the applicant, and the project turbines would be feathered until wind speeds reach 6.9 m/s from a half-hour before sunset to a half-hour after sunrise during the entirety of the fall migration season (August 1 through October 31) and spring migration season (March 15 through May 15), under which conditions take of listed species is unlikely to occur;
2. The applicant's Proposed Alternative, in which the Service would issue an ITP to authorize incidental take of covered species associated with the project's operations as described in the applicant's HCP. In this alternative, the project turbines would be feathered until wind speeds reach 3.5 m/s during the spring migration (April 1 through May 15) from a half-hour before sunset to a half-hour after sunrise, and during the fall migration season (August 1 through October 15), project turbines would be feathered until wind speeds reach 5.0 m/s from a half-hour before sunset to a half-hour after sunrise. While take is not anticipated during the summer (May 16-July 31), turbines will be feathered until wind speeds reach 3.0 m/s from a half-hour before sunset to a half-hour after sunrise. Minimization measures would be applicable until the temperature was greater than 10 degrees Celsius (°C). In this alternative, the applicant estimated take of Indiana and northern long-eared bats using an approach that addresses inherent uncertainty in take estimates by incorporating a 50 percent confidence bound around the mean estimate, and a 50 percent reduction in take from application of the proposed cut-in speed regime.
The various phases of this project began and will end in different years; thus, different numbers of turbines will be operational during the three different phases, which will change the amount of take during each of the phases. Thus, the estimated fatality rates under this alternative are:
• 10.8 Indiana bats and 2.5 northern long-eared bats per year for years 1-22;
• 6.3 Indiana bats and 1.5 northern long-eared bats per year for years 23-27; and
• 2.5 Indiana bats and 0.6 northern long-eared bats per year for years 28-30.
This results in a total of 276 Indiana bats and 64 northern long-eared bats over the 30-year permit term.
3. The Less Restrictive Operations alternative, in which the Service would
• 13.46 Indiana bats and 3.1 northern long-eared bats per year for years 1-22;
• 7.94 Indiana bats and 1.84 northern long-eared bats per year for years 23-27; and
• 3.11 Indiana bats and 0.72 northern long-eared bats per year for years 28-30.
This results in a total of 345 Indiana bats and 79 northern long-eared bats over the 30-year permit term;
4. More Restrictive Operations alternative, in which the Service would issue an ITP for the HCP, but turbine operations would be different than under the applicant's proposed project. All turbines would be feathered when the ambient temperature is above 10 °C based on a 5-minute rolling average from one half-hour before sunset to one half-hour after sunrise during the spring migration season (April 1 through May 15) up to 3.5 m/s, summer (May 16 through July 31) up to 3.0 m/s, and during the fall migration season (August 1 through October 15) up to 6.5 m/s. The estimated fatality rates for this alternative are:
• 9.47 Indiana bats and 2.18 northern long-eared bats per year for years 1-22;
• 5.59 Indiana bats and 1.28 northern long-eared bats per year for years 23-27; and
• 2.19 Indiana bats and 0.51 northern long-eared bats per year for years 28-30.
This results in a total of 277 Indiana bats and 65 northern long-eared bats over the 30-year permit term. The quantity of mitigation needed to offset the impact of the taking and the level of effort of monitoring varies between the alternatives, although mitigation, monitoring, adaptive management, and funding assurances are components of all three action alternatives.
The DEA considers the direct, indirect, and cumulative effects of the alternatives, including any measures intended to minimize and mitigate such impacts. The DEA also identifies additional alternatives that were considered but were eliminated from analysis as detailed in section 2.4 of the DEA.
The Service invites comments and suggestions from all interested parties on the content of the DEA. In particular, information and comments regarding the following topics are requested:
1. The direct, indirect, or cumulative effects that implementation of any alternative could have on the human environment;
2. Whether or not the significance of the impact on various aspects of the human environment has been adequately analyzed; and
3. Any other information pertinent to evaluating the effects of the proposed action on the human environment.
You may submit your comments and materials related to the draft HCP, DEA, or other supporting documents by one of the methods listed in
Comments and materials we receive, as well as documents associated with the notice, will be available for public inspection by appointment, during normal business hours, at the Ohio Ecological Services Field Office in Columbus, Ohio (see
We provide this notice under section 10(c) of the ESA (16 U.S.C.1539(c)) and its implementing regulations (50 CFR 17.22) and the NEPA (42 U.S.C. 4321
Office of the Secretary, Interior.
Notice of availability.
We, the Department of the Interior (DOI), announce the availability of a single, searchable, indexed website that contains all of DOI's guidance documents. This action is required by the Executive Order (E.O.) titled, “Promoting the Rule of Law Through Improved Agency Guidance Documents” in order to make guidance documents readily available to the public. This website is found at the Electronic Library of the Interior's Policies (ELIPS) at
This website is available on February 28, 2020.
The notice is available for public inspection at
Bivan Patnaik, Deputy Director of Regulatory Affairs, Office of the Executive Secretariat and Regulatory Affairs, by phone at 202-208-3181 or via the Federal Relay Service at 800-877-8339, or via email at:
A central principle of E.O. 13891 is that guidance should only clarify existing obligations and should not implement new, binding requirements on the public. Guidance is defined in the E.O. as “an agency statement of general applicability, intended to have future effect on the behavior of regulated parties, that sets forth a policy on statutory, regulatory, or technical issue, or an interpretation of a statute or regulation.” Therefore, DOI is establishing on its website a single, searchable, indexed database that links to all guidance documents in effect from each bureau and office within the Department.
The purpose of this notice is to announce that DOI's website for agency guidance documents subject to posting on the website under the E.O. will be the Electronic Library of the Interior Policies (ELIPS),
The website will contain all Departmental, bureau, service, or office guidance documents. Each guidance document that DOI publishes on its guidance website will include the following information:
A concise name for the guidance document.
The date on which the guidance document was issued.
The date on which the guidance document was posted to the website.
An agency unique identifier.
A hyperlink to the guidance document.
The general topic addressed by the guidance document.
One or two sentences summarizing the guidance document's content.
In addition to the information associated with each guidance document, the website will include a clearly visible note stating that: (1) Guidance documents lack the force and effect of law, unless expressly authorized by statute or incorporated into a contract; and (2) the DOI and its component bureaus and offices may not cite, use, or rely on any guidance that is not posted on the website existing under the E.O., except to establish historical facts.
E.O. 13891 also requires agencies to finalize new or amend existing regulations that set forth a process for issuing guidance documents, which DOI is currently preparing.
DOI publishes this notice in accordance with E.O. 13891 and the Administrative Procedure Act, codified in sections of chapters 5 and 7 of title 5, United States Code, that govern procedures for agency rulemaking and adjudication and provides for judicial review of final agency actions.
Department of the Interior.
Notice; request for comment.
The Department of the Interior (DOI), as part of its continuing effort to reduce paperwork and respondent burden, is announcing an opportunity for public comment on a new proposed collection of information by the Agency. Under the Paperwork Reduction Act of 1995 (PRA), Federal Agencies are required to publish notice in the
Submit comments identified by Information Collection 1090-XXXX, Improving Customer Experience (OMB Circular A-11, Section 280 Implementation), by any of the following methods:
•
•
Requests for additional information should be directed to Amira Boland, Office of Government-wide Policy, 1800 F St. NW, Washington, DC 20405; or via email to
Under the PRA, (44 U.S.C. 3501-3520) Federal Agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. “Collection of information” is defined in 44 U.S.C. 3502(3) and 5 CFR 1320.3(c) and includes Agency requests or requirements that members of the public submit reports, keep records, or provide information to a third party. Section 3506(c)(2)(A) of the PRA requires Federal Agencies to provide a 60-day notice in the
Whether seeking a loan, Social Security benefits, veterans benefits, or other services provided by the Federal Government, individuals and businesses expect Government customer services to be efficient and intuitive, just like services from leading private-sector organizations. Yet the 2016 American Consumer Satisfaction Index and the 2017 Forrester Federal Customer Experience Index show that, on average, Government services lag nine percentage points behind the private sector.
A modern, streamlined and responsive customer experience means: Raising government-wide customer experience to the average of the private sector service industry; developing indicators for high-impact Federal programs to monitor progress towards excellent customer experience and mature digital services; and providing the structure (including increasing transparency) and resources to ensure customer experience is a focal point for agency leadership. To support this, OMB Circular A-11 Section 280 established government-wide standards for mature customer experience organizations in government and measurement. To enable Federal programs to deliver the experience taxpayers deserve, they must undertake three general categories of activities: Conduct ongoing customer research, gather and share customer feedback, and test services and digital products.
These data collection efforts may be either qualitative or quantitative in nature or may consist of mixed methods. Additionally, data may be collected via a variety of means, including but not limited to electronic or social media, direct or indirect observation (
The results of the data collected will be used to improve the delivery of Federal services and programs. It will include the creation of personas, customer journey maps, and reports and summaries of customer feedback data and user insights. It will also provide government-wide data on customer experience that can be displayed on
DOI will collect this information by electronic means when possible, as well as by mail, fax, telephone, technical discussions, and in-person interviews. The Department of the Interior may also utilize observational techniques to collect this information.
DOI invites comments on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology. Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.
The authority for this action is the Paperwork Reduction Act of 1995 (44 U.S.C. 3501
Bureau of Land Management, Interior.
Notice of decision approving lands for conveyance.
The Bureau of Land Management (BLM) hereby provides constructive notice that it will issue an appealable decision approving conveyance of the surface estate in certain lands to Kugkaktlik Limited, for the Native village of Kipnuk, pursuant to the Alaska Native Claims Settlement Act of 1971, as amended (ANCSA). The lands approved for conveyance lie partially within the former Clarence Rhode National Wildlife Range, now known as the Yukon Delta National Wildlife Refuge. The subsurface estate in the lands lying outside the former Clarence Rhode National Wildlife Range will be conveyed to Calista Corporation when the surface estate is conveyed to Kugkaktlik Limited.
Any party claiming a property interest in the lands affected by the decision may appeal the decision in accordance with the requirements of 43 CFR part 4 within the time limits set out in the
You may obtain a copy of the decision from the Bureau of Land Management, Alaska State Office, 222 West Seventh Avenue, #13, Anchorage, AK 99513-7504.
Judy A. Kelley, BLM Alaska State Office, 907-271-3786, or
As required by 43 CFR 2650.7(d), notice is hereby given that the BLM will issue an appealable decision to Kugkaktlik Limited for the Native village of Kipnuk. The decision approves conveyance of the surface estate in certain lands pursuant to ANCSA (43 U.S.C. 1601,
Surface estate to be conveyed to Kugkaktlik Limited; Subsurface estate to be reserved to the United States.
Surface estate to be conveyed to Kugkaktlik Limited; Subsurface estate to be conveyed to Calista Corporation.
The decision addresses public access easements, if any, to be reserved to the United States pursuant to Sec. 17(b) of ANCSA (43 U.S.C. 1616(b)), in the lands described above.
The BLM will publish notice of the decision once a week for four consecutive weeks in
Any party claiming a property interest in the lands affected by the decision may appeal the decision in accordance with the requirements of 43 CFR part 4 within the following time limits:
1. Unknown parties, parties unable to be located after reasonable efforts have been expended to locate, parties who fail or refuse to sign their return receipt, and parties who receive a copy of the decision by regular mail which is not certified, return receipt requested, shall have until March 30, 2020 to file an appeal.
2. Parties receiving service of the decision by certified mail shall have 30 days from the date of receipt to file an appeal.
Parties who do not file an appeal in accordance with the requirements of 43 CFR part 4 shall be deemed to have waived their rights. Notices of appeal transmitted by facsimile will not be accepted as timely filed.
Bureau of Land Management, Interior; and Bureau of Indian Affairs, Interior.
Notice of Availability.
In compliance with the National Environmental Policy Act of 1969, as amended (NEPA), and the Federal Land Policy and Management Act of 1976, as amended (FLPMA), the Bureau of Land Management (BLM) Farmington Field Office, Farmington, New Mexico, and Bureau of Indian Affairs (BIA) Navajo Regional Office, Gallup, New Mexico, have prepared a Draft Resource Management Plan Amendment (RMPA) and associated Environmental Impact Statement (EIS). This notice announces a 90-day public review period of the Draft RMPA/EIS, and that the BLM and BIA will hold public meetings to solicit comments.
To ensure that comments will be considered, the BLM and BIA must receive written comments on the Draft RMPA/EIS within May 28, 2020 that the Environmental Protection Agency publishes its Notice of Availability for the Draft RMPA/EIS in the
You may submit comments related to the Draft RMPA/EIS through the following methods:
Copies of the Draft RMPA/EIS are available from the BLM and the BIA at the following addresses: BLM Farmington Field Office, 6251 College Blvd., Suite A, Farmington, New Mexico 87402; BIA Navajo Regional Office, 301 West Hill, Gallup, New Mexico 87301; BIA Eastern Agency Office, 222 Chaco Blvd., Crownpoint, NM 87313; Pueblo Pintado Chapter House, Navajo Route 9 HCR 79, Cuba, NM 87013; Ojo Encino Chapter House, HCR 79, Ojo Encino, NM 87013; Counselor Chapter House 6828 Highway 44, Counselor, NM 87018; Nageezi Chapter House, 1153 US-550, Nageezi, NM 87037; Lake Valley Chapter House, 7750 NM 371, Crownpoint, NM 87313; 536 County Road 7150, Bloomfield, NM 87413; Upper Fruitland Chapter House, Fruitland, NM; San Juan Chapter House, Lower Waterflow, NM; Hogback Chapter House, Shiprock, NM; Burnham Chapter House, Newcomb, NM; White Rock Chapter House, Crownpoint, NM; Becenti Chapter House, Crownpoint, NM; Whitehorse Lake Chapter House, Cuba, NM; Torreon Chapter House, Cuba, NM; Navajo Nation Library, Hwy. 264 Loop Road, Window Rock, AZ 86515; Farmington Public Library, 2101 Farmington Ave, Farmington, NM 87401; and BLM New Mexico State Office, 301 Dinosaur Trail, Santa Fe, New Mexico 87508.
Jillian Aragon, BLM Project Manager; telephone: 505-564-7722; address: 6251 College Blvd., Suite A, Farmington, New Mexico 87402; or contact Robert Begay, BIA Project Manager; telephone 505-863-8515; address P.O. Box 1060; Gallup, New Mexico 87301; or email both at:
This document evaluates alternatives for updating management of BLM-managed lands and minerals in the Farmington Field Office, considering new technologies for oil and gas extraction. It also evaluates alternatives and issues related to the BIA's authority over mineral leasing and associated activity decisions on Navajo Tribal Trust lands and Navajo Indian allotments (hereafter referred to as Navajo Trust and Navajo Indian allotments, respectively). The Draft RMPA/EIS has been developed in
The BIA has the responsibility to manage fluid and solid mineral leasing for Indian mineral owners. The Indian mineral owners include the Navajo Nation on Navajo Tribal trust lands and individual Navajo allottees on Navajo individual Indian allotments. The Notice of Intent announcing that the BIA had joined the project was published in the
The planning area spans portions of San Juan, Rio Arriba, McKinley, and Sandoval counties in New Mexico. It encompasses approximately 4,189,500 acres of land, including approximately 675,400 acres of Navajo Trust surface, 1,316,200 acres of BLM-managed land, and 210,100 acres of Navajo Indian allotments, across 17 Navajo Nation chapters.
The purpose of the public comment process is to receive public input on the Draft RMPA/EIS. The BLM's preliminary planning criteria identified in the February 25, 2014,
The BLM and BIA planning teams developed four preliminary planning issues to be addressed in the RMPA, including oil and gas development; lands and realty; BLM-managed lands with wilderness characteristics; and vegetation. The agencies selected these issues based on broad concerns or controversies related to conditions, trends, needs, and existing and potential uses of planning area lands. The agencies also identified issues during a review of current land management documents, including the 2003 Farmington RMP, and associated plan amendments and applicable Navajo Nation chapter house land use plans. These planning issues address each agency's purpose of and need for the RMPA/EIS and reflect the range of decisions to be analyzed in the RMPA/EIS. Land use planning and NEPA regulations require the BLM and BIA to formulate a reasonable range of alternatives to consider different management scenarios and different means of resolving resource or resource use conflicts. Established planning criteria, as outline in 43 CFR part 1610, guide the alternatives development process. This pursuit provides the BLM, BIA, and the public with an understanding of the various ways in which challenges surrounding resources and resource uses might be resolved. This Draft RMPA/EIS offers the BLM State Director and the BIA Navajo Regional Director a reasonable range of alternatives from which to make informed decisions. Both agencies developed one no action alternative and four action alternatives. The action alternatives for each agency were designed to accomplish the following:
• Address the four planning issues;
• Fulfill the purpose of and need for the RMPA/EIS;
• Meet the BLM's multiple use mandates of FLPMA (43 U.S.C., Section 1716);
• Achieve the BIA's mission to enhance quality of life, promote economic opportunity, and protect and improve trust assets.
The range of alternatives for each agency is as follows:
(1) BLM No Action Alternative—Continue 2003 RMP management direction;
(2) BLM Alternative A—Focus on managing and enhancing habitats in the BLM decision area;
(3) BLM Alternative B—Emphasize the preservation and protection of the Chacoan and cultural landscapes unique to northern New Mexico;
(4) BLM Alternative C—Focus on a strategy that balances community needs and development, while enhancing land health; and
(5) BLM Alternative D—Focus on maximizing resources that target economic outcomes, while sustaining land health.
(1) BIA No Action Alternative—Continue current management of leasing practices;
(2) BIA Alternative A—Focus on protecting and enhancing natural environments, while emphasizing the protection of sensitive wildlife areas and ecological resources;
(3) BIA Alternative B—Emphasize the preservation and protection of the cultural and natural landscapes unique to northern New Mexico;
(4) BIA Alternative C—Focus on allowing development to occur in harmony with the traditional, historical, socioeconomic, and cultural lifeways of the planning area; and
(5) BIA Alternative D—Focus on making the most of resources that target economic outcomes, while protecting land health.
The BLM and BIA have provided extensive opportunities for meaningful and substantive input and comments when preparing this Draft RMPA/EIS. Those invited to participate in the process include the public, non-governmental organizations, other Federal agencies, Tribal members, and state, local, and Tribal governments.
Public involvement for this Draft RMPA/EIS has consisted of the following:
• An initial BLM public scoping comment period from February 25 to May 28, 2014;
• A second public scoping period focused on BIA issues from October 21, 2016, to February 26, 2017;
• Public outreach via bulletins, newspaper announcements, public meetings, and the project website;
• Collaboration with Federal, state, local, and Tribal governments and cooperating agencies; and
• Public review of and comment on the Draft RMPA/EIS.
The BLM and BIA are required to consult Indian Tribes, as applicable, on a government-to-government basis, in accordance with Executive Order 13175 and other policies. Tribal and individual Indian allottee concerns, including impacts on Indian trust assets and potential impacts on cultural resources in the planning area, will continue to be given due consideration.
Federal, state, and local agencies and individual Indian allottees, Tribes, and
You may submit comments on the Draft RMPA/EIS in writing at any public comment meeting, or by using one of the methods listed in the
Written comments, including names and addresses of respondents, will be available for public review at one of the addresses listed in the
Before including your address, telephone number, email address, or other personal identifying information in your comment, be aware that your entire comment—including your personal identifying information—may be made publicly available at any time. You can ask us in your comment to withhold your personal identifying information from public review, but we cannot guarantee that we will be able to do so.
40 CFR 1506.6, 40 CFR 1506.10, 43 CFR 1610.2
Bureau of Land Management, Interior; Forest Service, USDA.
Notice of availability.
In accordance with the National Environmental Policy Act of 1969 (NEPA), as amended, the Bureau of Land Management (BLM) and the U.S. Department of Agriculture, Forest Service (USFS) Caribou-Targhee National Forest (CTNF), have prepared a Final Environmental Impact Statement (Final EIS) for the proposed East Smoky Panel Mine Project (Project) and by this notice are announcing its availability.
The BLM will not issue a final decision on the proposal for a minimum of 30 days after the date the Environmental Protection Agency publishes its notice of availability in the
Copies of the East Smoky Panel Mine Project Final EIS are available for public inspection at the BLM Pocatello Field Office at 4350 Cliffs Drive, Pocatello, ID 83204. Interested persons may also review the Final EIS on the internet at the following locations:
Kyle Free, BLM Pocatello Field Office, 4350 Cliffs Drive, Pocatello, ID 83204; phone 208-478-6352; email:
The J.R. Simplot Company (Simplot) submitted a proposed lease modification (enlargement) and Mine and Reclamation Plan (M&RP) for the East Smoky Panel leases (IDI-015259, IDI-26843, and IDI-012890), with the intent of expanding the current Smoky Canyon Phosphate Mine in Caribou County, Idaho.
The BLM, as the Federal lease administrator, is the lead agency, and the USFS is the co-lead agency. The Idaho Department of Environmental Quality, Idaho Department of Lands, and Idaho Governor's Office of Energy and Mineral Resources are cooperating agencies.
The NOA for the Draft EIS published on September 28, 2018, initiating a 90-day public comment period. Agencies, organizations, and interested parties provided comments on the Draft EIS via mail, email, and public meetings.
The Final EIS fully addresses issues identified during scoping and during public review of the Draft EIS by analyzing impacts to water resources, air quality, human health and safety, socioeconomics, and wildlife. It also addresses reclamation, financial assurance, mitigation and monitoring. The Final EIS evaluates three alternatives: The Proposed Action, the Preferred Alternative, and a No Action Alternative. The agencies identified Alternative 1 as the Preferred Alternative because it reduces impacts to groundwater and other resources. Under the Preferred Alternative, overall mining operations, mining sequences, and other associated ancillary operations remain the same as described for the Proposed Action. Use of a steeper pit wall would reduce the ultimate pit footprint by approximately 78 acres. This eliminates the need to mine the highly seleniferous cherty shale overburden. The reduction of seleniferous overburden material eliminates the need for the Proposed Action's geologic store-and-release cover and substitutes a less expensive and less complex, soil-only cover.
The BLM and USFS will make separate but coordinated decisions related to the proposed Project. The BLM will either approve, approve with modifications, or deny the M&RP; recommend whether or not to modify lease IDI-015259; and decide whether to grant a modification to the previously approved B-Panel Mine Plan of the Smoky Canyon Mine. The BLM will base its decisions on the Final EIS, public and agency input, and any
The portion of the Project related to USFS SUAs for off-lease activities is subject to the objection process pursuant to 36 CFR parts 218 and 219. The USFS will provide instructions for filing objections in the legal notice published in the newspaper of record for the Draft USFS ROD. The USFS will only accept objections from those who have previously submitted specific written comments regarding the proposed project during scoping or other designated opportunities for public comment in accordance with 36 CFR 218.5(a) and 219.53(a). Objection issues must be based on previously submitted, timely, and specific written comments regarding the proposed project unless they are based on new information arising after designated opportunities. The BLM will release a ROD concurrent with release of the Final USFS ROD.
Bureau of Land Management, Interior.
Notice of decision approving lands for conveyance.
The Bureau of Land Management (BLM) hereby provides constructive notice that it will issue an appealable decision approving conveyance of the surface estate in certain lands to Saguyak Incorporated, for the Native village of Clarks Point, pursuant to the Alaska Native Claims Settlement Act of 1971 (ANCSA), as amended. As provided by ANCSA, the BLM will convey the subsurface estate in the same lands to Bristol Bay Native Corporation when the BLM conveys the surface estate to Saguyak Incorporated.
Any party claiming a property interest in the lands affected by the decision may appeal the decision in accordance with the requirements of 43 CFR part 4 within the time limits set out in the
You may obtain a copy of the decision from the BLM, Alaska State Office, 222 West Seventh Avenue, #13, Anchorage, Alaska 99513-7504.
Bettie J. Shelby, BLM Alaska State Office, 907-271-5596 or
As required by 43 CFR 2650.7(d), notice is hereby given that the BLM will issue an appealable decision to Saguyak Incorporated. The decision approves conveyance of the surface estate in certain lands pursuant to ANCSA (43 U.S.C. 1601,
The decision addresses public access easements, if any, to be reserved to the United States pursuant to Sec. 17(b) of ANCSA (43 U.S.C. 1616(b)), in the lands described above. The BLM will also publish notice of the decision once a week for four consecutive weeks in the “The Bristol Bay Times & The Dutch Harbor Fisherman” newspaper. Any party claiming a property interest in the lands affected by the decision may appeal the decision in accordance with the requirements of 43 CFR part 4 within the following time limits:
1. Unknown parties, parties unable to be located after reasonable efforts have been expended to locate, parties who fail or refuse to sign their return receipt, and parties who receive a copy of the decision by regular mail which is not certified, return receipt requested, shall have until March 30, 2020 to file an appeal.
2. Parties receiving service of the decision by certified mail shall have 30 days from the date of receipt to file an appeal.
Parties who do not file an appeal in accordance with the requirements of 43 CFR part 4 shall be deemed to have waived their rights. Notices of appeal transmitted by facsimile will not be accepted as timely filed.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission has determined not to review an initial determination (“ID”) (Order No. 32) issued by the presiding administrative law judge (“ALJ”) amending the complaint and notice of investigation, and terminating the investigation with respect to EPrinter Solution LLC of Pomona, California (“EPrinter”) and IFree E-Commerce Co.
Robert Needham, Office of the General Counsel, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone (202) 708-5468. Copies of non-confidential documents filed in connection with this investigation are or will be available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone (202) 205-2000. General information concerning the Commission may also be obtained by accessing its internet server (
The Commission instituted this investigation on September 23, 2019, based on a complaint filed by Brother Industries, Ltd., of Nagoya, Japan; Brother International Corporation (U.S.A.) of Bridgewater, New Jersey; and Brother Industries (U.S.A.), Inc., of Bartlett, Tennessee (together, “Brother”). 84 FR 49762-63. The complaint, as supplemented, alleges violations of section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. 1337, in the importation into the United States, the sale for importation, and the sale within the United States after importation of certain toner cartridges, components thereof, and systems containing same by reason of infringement of certain claims of U.S. Patent Nos. 9,568,856; 9,575,460; 9,632,456; 9,785,093; and 9,846,387.
On January 10, 2020, Brother filed a motion seeking leave to amend the complaint and notice of investigation to correct the name for one respondent and to correct the address for seven respondents. Brother also sought to terminate the investigation with respect to EPrinter and IFree based on a partial withdrawal of the complaint due to the inability to serve those parties with the complaint and notice of investigation. On January 22, 2020, OUII filed a response in support of the motion.
On January 28, 2020, the ALJ issued the subject ID, and ordered that the complaint and notice of investigation be amended as requested. The subject ID additionally terminated the investigation with respect to EPrinter and IFree based on the withdrawal of the complaint with respect to those entities. No petitions for review of the ID were received.
The Commission has determined not to review the subject ID.
The authority for the Commission's determination is contained in section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in part 210 of the Commission's Rules of Practice and Procedure (19 CFR part 210).
By order of the Commission.
U.S. International Trade Commission.
Notice.
Notice is hereby given that the U.S. International Trade Commission (“Commission”) has determined not to review an initial determination (“ID”) of the presiding administrative law judge (“ALJ”) terminating this investigation as to certain respondents and granting leave to amend the complaint and notice of investigation to add a respondent.
Ron Traud, Office of the General Counsel, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone 202-205-3427. Copies of non-confidential documents filed in connection with this investigation are or will be available for inspection during official business hours (8:45 a.m. to 5:15 p.m.) in the Office of the Secretary, U.S. International Trade Commission, 500 E Street SW, Washington, DC 20436, telephone 202-205-2000. General information concerning the Commission may also be obtained by accessing its internet server at
On November 8, 2019, the Commission instituted this investigation based on a complaint filed by Erbe Elektromedizin GmbH of the Republic of Germany and Erbe USA, Inc. of Marietta, Georgia. 84 FR 60451. The complaint alleges violations of section 337 of the Tariff Act of 1930, as amended, 19 U.S.C. 1337 based upon the importation into the United States, the sale for importation, or the sale within the United States after importation of certain argon plasma coagulation system probes, their components, and other argon plasma coagulation system components for use therewith by reason of infringement of certain claims of U.S. Patent Nos. D577,671; 7,311,707; 7,717,911; 9,510,889; and 9,603,653.
On January 27, 2020, the private parties filed a joint, unopposed motion seeking to terminate this investigation in part based on withdrawal of the complaint as to named respondents Olympus KeyMed Group Limited, KeyMed (Medical & Industrial Equipment) Ltd., Olympus Bolton, and Olympus Surgical Technologies Europe | Cardiff. The motion also sought to amend the complaint and notice of investigation to add Gyrus Medical Ltd. as a named respondent.
On January 29, 2020, the ALJ issued Order No. 10, the subject ID, granting the motion. The ID finds that the motion complies with the Commission's Rules and that no extraordinary circumstances warrant denying the motion. No petitions for review of the subject ID were filed.
The Commission has determined not to review the subject ID.
The authority for the Commission's determination is contained in section 337 of the Tariff Act of 1930, as amended (19 U.S.C. 1337), and in Part 210 of the Commission's Rules of Practice and Procedure (19 CFR part 210).
By order of the Commission.
Notice is hereby given pursuant to the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, Stipulation, and Competitive Impact Statement have been filed with the United States District Court for the District of Columbia in
Copies of the Complaint, proposed Final Judgment, and Competitive Impact Statement are available for inspection on the Antitrust Division's website at
Public comment is invited within 60 days of the date of this notice. Such comments, including the name of the submitter, and responses thereto, will be posted on the Antitrust Division's website, filed with the Court, and, under certain circumstances, published in the
The United States of America (“United States”), acting under the direction of the Attorney General of the United States, brings this civil antitrust action against Defendants Olympus Growth Fund VI, L.P. (“Olympus”), Liqui-Box, Inc. (“Liqui-Box”), and DS Smith plc (“DS Smith”) to enjoin Olympus's proposed acquisition of DS Smith's Plastics Division (“DS Smith Plastics”), through Liqui-Box, a portfolio company of Olympus. The United States complains and alleges as follows:
1. Pursuant to a Stock Purchase Agreement dated March 5, 2019, Liqui-Box proposes to acquire DS Smith Plastics for approximately $500 million, making the combined company one of the largest bag-in-box (“BiB”) suppliers in the United States.
2. BiBs are engineered plastic bags used to store and dispense liquids such as milk, post-mix (
3. In the United States, Liqui-Box and DS Smith are two of only three significant suppliers of BiBs for nearly all end uses, including dairy, post-mix, and smoothies. Liqui-Box and DS Smith also are two of only four significant suppliers of BiBs for wine in the United States. The proposed acquisition will eliminate competition between Liqui-Box and DS Smith to supply these BiBs to customers and is likely to lead to increased prices, lower quality and service, and less innovation.
4. As a result, the proposed acquisition likely would substantially lessen competition for the development, manufacture, and sale of dairy, post-mix, smoothie, and wine BiBs in the United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 18, and should be enjoined.
5. Olympus, a fund managed by private equity firm Olympus Partners, is a Delaware limited partnership with headquarters in Stamford, Connecticut. In 2018, Olympus Partners had approximately $8.5 billion total capital under management between its different funds, with Olympus comprising approximately $2.3 billion of that total.
6. Liqui-Box, a company owned by Olympus, is a Delaware corporation with headquarters in Richmond, Virginia. Liqui-Box is a global manufacturer of packaging and packaging equipment, including BiBs, with four U.S. manufacturing facilities, as well as additional facilities across the world. In 2018, Liqui-Box had total sales of $177 million, including approximately $123 million in the United States.
7. DS Smith is a United Kingdom public limited company with headquarters in London, England. DS Smith is a global manufacturer of packaging, packaging equipment, and recycled paper. DS Smith operates DS Smith Plastics, a division that manufactures flexible packaging and dispensing solutions, rigid packaging, injection-molded products, and foam products. Among DS Smith Plastics' flexible packaging products are BiBs, which are primarily sold under the Rapak brand name in the United States. DS Smith Plastics has its U.S. headquarters in Romeoville, Illinois,
8. Pursuant to a Stock Purchase Agreement dated March 5, 2019, Liqui-Box agreed to acquire DS Smith Plastics for approximately $500 million.
9. The United States brings this action under Section 15 of the Clayton Act, 15 U.S.C. 25, to prevent and restrain Defendants from violating Section 7 of the Clayton Act, 15 U.S.C. 18.
10. Defendants develop, manufacture, and sell BiBs throughout the United States in the flow of interstate commerce. Defendants' activities in the development, manufacture, and sale of BiBs substantially affect interstate commerce. This Court has subject-matter jurisdiction over this action pursuant to Section 15 of the Clayton Act, 15 U.S.C. 25, and 28 U.S.C. 1331, 1337(a), and 1345.
11. Defendants have consented to venue and personal jurisdiction in this District. Venue is proper in this District under Section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1391(c).
12. BiBs are used to store and dispense liquids such as milk, post-mix, smoothies, and wine. The components of a BiB include a flexible plastic bag and an attached fitment. BiBs typically hold between one and six gallons of liquid, but they also come in smaller and larger sizes. The attached fitment facilitates the transfer of liquids into and out of the bag.
13. The flexible plastic bag component of a BiB is typically made up of one to five layers of film. The films are most often made of polyethylene (“PE”), but also can be made with ethylene vinyl alcohol (“EVOH”) or other materials, and are bound together using heat sealing. Customers require different numbers and types of layers to meet individual product demands. For example, the most basic bags consist of a single layer of PE that secures the liquid during transport. More sophisticated bags have additional layers of engineered film that add durability, metallization, and oxygen, moisture, or temperature resistance.
14. The fitment component of a BiB typically is made from resin using injection molding and attached to the flexible plastic bag component via heat sealing. The design of the fitment is determined by the liquid that will go into the bag and the method that will be used to dispense the liquid out of the bag. For example, if the BiB is used to dispense post-mix into a soda dispenser, the fitment will be designed to attach to a soda dispenser. The simplest fitment is a basic cap, which can be flipped off or unscrewed to pour out the liquid. Highly engineered fitments can have specialized elements such as a built-in push-tap feature or an oxygen barrier to provide resistance to the elements. Fitments are often protected by patents due to the specialized nature and high degree of engineering that can be required in fitment manufacturing.
15. BiBs are shipped to the customer who fills the BiB with liquid using a filler machine that the customer typically purchases or leases from the BiB supplier. The customer then ships the filled BiB to a store, restaurant, or other food processor. For example, a post-mix manufacturer seeking to distribute its post-mix to a convenience store would purchase BiBs and a filler machine from a BiB supplier, fill the BiBs with the post-mix at its own facility, and then ship the filled BiBs to the convenience store for use in the convenience store's dispensing machine.
16. BiBs are distinct from and have numerous advantages over other forms of packaging. For example, compared to rigid containers (
17. BiBs for dairy products hold liquids such as ice cream mix, yogurt, milk, and cream. Dairy BiBs are typically durable bags made from PE and often have a flip-cap or screw-off cap fitment. Dairy BiBs are designed to reduce the risk of contamination and extend shelf life.
18. There are no substitutes for dairy BiBs. Dairy BiBs provide dairy liquids to customers in an easy to use, inexpensive format that other packaging does not offer. For example, rigid containers require more storage space, may not keep the dairy liquid as fresh, and may have a higher risk of contamination. BiBs for other end uses cannot be substituted for dairy BiBs due to the unique specifications for dairy BiBs.
19. In the event of a small but significant non-transitory price increase for dairy BiBs, customers would not substitute away from dairy BiBs in a sufficient volume to make the price increase unprofitable. Therefore, the development, manufacture, and sale of dairy BiBs is a relevant product market and line of commerce within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.
20. Post-mix BiBs hold concentrated drink mixes such as soda syrup and juice concentrates. These concentrates are often mixed with carbonated or non-carbonated water before being served. Post-mix BiBs are typically made with layers of PE or EVOH and a fitment that attaches to a drink dispensing machine. Bags used for post-mix must be very strong to accommodate high filling flow rates required by post-mix manufacturers. Post-mix BiBs are designed to maintain freshness and ensure all liquid is dispensed from the bag while minimizing leaks and spills and accurately dispensing the product.
21. There are no substitutes for post-mix BiBs. Post-mix BiBs must attach to a dispensing machine, which a rigid container cannot do. Moreover, BiBs for other end uses cannot be substituted for post-mix BiBs due to the unique fitments and bag design required for post-mix BiBs.
22. In the event of a small but significant non-transitory price increase for post-mix BiBs, customers would not substitute away from post-mix BiBs in a sufficient volume to make the price increase unprofitable. Therefore, the development, manufacture, and sale of post-mix BiBs is a relevant product market and line of commerce within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.
23. Smoothie BiBs hold mixes and other ingredients for smoothies and other drinks. Smoothie BiBs are typically made with layers of PE that offer low oxygen permeability. Like post-mix BiBs, most fitments on smoothie BiBs are designed to be
24. There are no substitutes for smoothie BiBs. Rigid containers cannot be attached to the dispensing machines smoothie BiBs are used in. Further, rigid containers are more expensive and bulkier to transport, may not keep the liquid as fresh, and may have a higher risk of contamination. Moreover, BiBs for other end uses cannot be substituted for smoothie BiBs due to the unique specifications required for smoothie BiBs. Fitments for smoothie BiBs, for example, often are designed to specifically interact with the dispensing machines.
25. In the event of a small but significant non-transitory price increase for smoothie BiBs, customers would not substitute away from smoothie BiBs in a sufficient volume to make the price increase unprofitable. Therefore, the development, manufacture, and sale of smoothie BiBs is a relevant product market and line of commerce within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.
26. Wine BiBs hold the wine inside of boxed wines, which are often sold in retail outlets. The bag component of wine BiBs is typically made from PE and EVOH and is designed to protect against oxidation and UV light. The fitment for wine BiBs is typically a push, pull, or twist tap that is specifically designed to avoid allowing oxygen into the bag when the wine is dispensed. This provides a longer shelf life for wine once opened as compared to traditional bottles. Because the fitments for wine BiBs are operated directly by individuals, they must be simple to operate and user friendly.
27. There are no substitutes for wine BiBs. BiBs for other end uses cannot be substituted for wine BiBs due to the unique specifications for wine BiBs. Both the bag and fitment are specially engineered to provide an oxygen barrier for the product that other BiBs typically do not provide. Bags and fitments that lack this specialized oxygen barrier would allow oxygen to seep in and degrade the wine, making it unsuitable for consumption after only a short time. Wine bottles are not adequate substitutes for wine BiBs. A wine BiB can keep wine fresh for up to four weeks after it is opened, significantly longer than a wine bottle can. Also, wine BiBs provide faster and more sanitary pouring for food service operators than bottles do, with no risk of broken glass.
28. In the event of a small but significant non-transitory price increase for wine BiBs, customers would not substitute away from wine BiBs in a sufficient volume to make the price increase unprofitable. Therefore, the development, manufacture, and sale of wine BiBs is a relevant product market and line of commerce within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.
29. Customers in the United States do not purchase dairy, post-mix, smoothie, and wine BiBs (collectively, the “Relevant BiB Products”) from suppliers located outside the United States. Shipping these products from outside the United States generally would not be economical because the shipping costs are too large relative to the cost of the BiB itself. In addition, BiBs manufactured and sold outside the United States often have different specifications than those manufactured and sold in the United States due to, for example, differences in the liquids stored in the BiBs or differences in dispensing machines. Further, it is important for a supplier of BiBs in the United States to be able to timely provide service to its customers who have issues with the BiBs, such as leakage or breakage of the bags or problems with the attachment of the BiBs to the filler machines. Suppliers located outside the United States do not have employees located in the United States to timely service BiB customers in the United States.
30. In the event of a small but significant non-transitory increase in the price of the Relevant BiB Products, customers in the United States would not procure these products from suppliers located outside the United States in a sufficient volume to make such a price increase unprofitable. Accordingly, the United States is a relevant geographic market within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.
31. Liqui-Box, DS Smith, and one other company are the only significant suppliers of dairy, post-mix, and smoothie BiBs to customers located in the United States. Liqui-Box and DS Smith are two of only four suppliers of wine BiBs to customers located in the United States.
32. Liqui-Box and DS Smith compete vigorously with one another on the basis of price, quality, and service in the markets for the Relevant BiB Products in the United States. Competition between Liqui-Box and DS Smith has fostered innovation and led to the development of new types of BiBs and product features. The proposed acquisition would eliminate the substantial head-to-head competition between Liqui-Box and DS Smith and the benefits that customers have realized from that competition in the form of lower prices, better quality and service, and innovation. By eliminating DS Smith as a competitor in the development, manufacture, and sale of the Relevant BiB Products in the United States, the proposed acquisition of DS Smith Plastics would substantially increase the likelihood that Liqui-Box would increase prices, reduce quality and service, and diminish investment in research and development below what it would have been absent the acquisition.
33. The proposed acquisition, therefore, would likely substantially lessen competition in the development, manufacture, and sale of the Relevant BiB Products in the United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
34. Entry into the development, manufacture, and sale of the Relevant BiB Products would not be timely, likely, or sufficient to prevent the harm to competition caused by Liqui-Box's proposed acquisition of DS Smith Plastics.
35. Entry into the markets for the Relevant BiB Products is costly and time consuming. Significant upfront capital expenditures are required to enter. The machinery to manufacture BiBs, including injection molding machines for the fitments and production lines that seal the bags and attach the fitments, is expensive and highly engineered. Manufacturing BiBs in accordance with customer requirements requires skilled employees and industry know-how that can take years to establish. Further, customers demand that suppliers have a proven ability to supply BiBs with the required specifications so that their BiBs do not leak or break and are able to store the liquids for the required amount of time without spoiling. This reputation for having a quality product takes significant time to build. Finally, a new entrant would need to hire trained technicians capable of providing timely service to customers when BiBs leak, break, or encounter other product quality issues.
36. The acquisition of DS Smith Plastics by Liqui-Box is likely to substantially lessen competition in each of the relevant markets set forth above in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
37. The transaction will likely have the following anticompetitive effects, among others, in the relevant markets:
a. Competition between Liqui-Box and DS Smith will be eliminated;
b. competition generally will be substantially lessened; and
c. prices will likely increase, quality and the level of service will likely decrease, and innovation will likely decline.
38. The United States requests that this Court:
a. Adjudge and decree Liqui-Box's acquisition of DS Smith Plastics to be unlawful and in violation of Section 7 of the Clayton Act, 15 U.S.C. 18;
b. enjoin Defendants and all persons acting on their behalf from consummating the proposed acquisition of DS Smith Plastics by Liqui-Box or from entering into or carrying out any other agreement, plan, or understanding the effect of which would be to combine Liqui-Box with DS Smith Plastics;
c. award the United States its costs of this action; and
d. grant the United States such other relief as the Court deems just and proper.
The Court has jurisdiction over the subject matter of and each of the parties to this action. The Complaint states a claim upon which relief may be granted against Defendants under Section 7 of the Clayton Act, as amended (15 U.S.C. 18).
As used in this Final Judgment:
A. “Acquirer” means TriMas or another entity to whom Defendants divest the Divestiture Assets.
B. “Liqui-Box” means Defendant Liqui-Box, Inc., a Delaware corporation with its headquarters in Richmond, Virginia; its successors and assigns; and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees.
C. “Olympus Growth” means Defendant Olympus Growth Fund VI, L.P., a Delaware limited partnership with its headquarters in Stamford, Connecticut; its successors and assigns; and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees.
D. “DS Smith” means Defendant DS Smith plc, a United Kingdom corporation with the U.S. headquarters of its Plastics Division in Romeoville, Illinois; its successors and assigns; and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees.
E. “TriMas” means TriMas Corporation, a Delaware corporation with its headquarters in Bloomfield Hills, Michigan; its successors and assigns; and its subsidiaries, divisions, groups, affiliates, partnerships, and joint ventures, and their directors, officers, managers, agents, and employees.
F. “BiB Products” means all components of Bag-in-Box (“BiB”) packaging and solutions, including, but not limited to, bags and fitments, whether the bags or fitments are sold as part of a complete BiB solution or individually. The term “BiB Products” does not include components used solely for tea or coffee.
G. “Rapak Business” means the development, manufacture, and sale of BiB Products and filler machines for BiB Products by the Plastics Division of DS Smith in the United States.
H. “Divestiture Assets” means the Rapak Business, including:
1. All of Defendants' rights, title, and interests in the facilities located at the following addresses (the “Divestiture Facilities”):
a. 7430 New Augusta Road, Indianapolis, Indiana 46268 (“Indianapolis Plant”);
b. 6907 Coffman Road, Indianapolis, Indiana 46268 (“Indianapolis Warehouse”);
c. 29959 Ahern Avenue, Union City, California 94587 (“Union City Plant”); and
d. 1020 Davey Road, Woodbridge, Illinois 60517;
2. The DS Smith production lines listed in Appendix A (the “Divested Lines”);
3. The DS Smith injection molding machines listed in Appendix B and all molds and dies, fitment assembly machines, and machinery used to manufacture fitments for the Rapak Business (the “Divested Fitment Equipment”);
4. At the option of Acquirer, all other tangible assets related to or used in connection with the Rapak Business, including but not limited to: All manufacturing equipment, quality assurance equipment, research and development equipment, machine assembly equipment, tooling and fixed assets, personal property, inventory, office furniture, materials, supplies, and other tangible property; all licenses, permits, certifications, and authorizations issued by any governmental organization; all contracts, teaming arrangements, agreements, leases, commitments, certifications, and understandings, including supply agreements; all customer lists, contracts, accounts, and credit records; all repair and performance records; and all other records;
5. All intangible assets related to or used in connection with the Rapak Business, including but not limited to: All patents; licenses and sublicenses; intellectual property; copyrights; trademarks, trade names, service marks, and service names (including the Rapak name and all trademarks, service marks, and service names associated with the Rapak brand); technical information; computer software and related documentation; customer relationships, agreements, and contracts; know-how; trade secrets; drawings; blueprints; designs; design protocols; specifications for materials; specifications for parts and devices; safety procedures for the handling of materials and substances; quality assurance and control procedures; design tools and simulation capability; all manuals and technical information DS Smith provides to its own employees, customers, suppliers, agents, or licensees; and all research data concerning historic and current research and development efforts, including but not limited to designs of experiments and the results of successful and unsuccessful designs and experiments; and
6. At the option of Acquirer, inventory of BiB Products up to the amount sold by the Rapak Business in any two (2) months in 2019, with the specific months to be determined by Acquirer.
I. “Relevant Employees” means all employees engaged in the Rapak Business.
A. This Final Judgment applies to Liqui-Box, Olympus Growth, and DS Smith, as defined above, and all other persons in active concert or participation with any of them who receive actual notice of this Final Judgment by personal service or otherwise.
B. If, prior to complying with Section IV and Section V of this Final Judgment, Defendants sell or otherwise dispose of all or substantially all of their assets or of lesser business units that include the Divestiture Assets, Defendants must require the purchaser to be bound by the provisions of this Final Judgment. Defendants need not obtain such an agreement from Acquirer of the assets divested pursuant to this Final Judgment.
A. Defendants are ordered and directed, within forty-five (45) calendar days after the Court's entry of the Asset Preservation Stipulation and Order in this matter, to divest the Divestiture Assets in a manner consistent with this Final Judgment to TriMas or an alternative Acquirer acceptable to the United States, in its sole discretion. The United States, in its sole discretion, may agree to one or more extensions of this time period not to exceed sixty (60) calendar days in total and will notify the Court in such circumstances. Defendants agree to use their best efforts to divest the Divestiture Assets as expeditiously as possible.
B. Prior to the divestiture of the Divestiture Assets pursuant to Paragraph IV(A), Defendants must relocate any Divested Lines located at DS Smith's facility located at 1201 Windham Parkway, Romeoville, Illinois 60446 (“Romeoville Plant”) to one or more of the Divestiture Facilities, as determined by Acquirer, and must ensure that all Divested Lines are fully operational at the time of the divestiture.
C. In the event Defendants are attempting to divest the Divestiture Assets to an Acquirer other than TriMas, Defendants promptly must make known, by usual and customary means, the availability of the Divestiture Assets. Defendants must inform any person making an inquiry regarding a possible purchase of the Divestiture Assets that they are being divested pursuant to this Final Judgment and provide that person with a copy of this Final Judgment. Defendants must offer to furnish to all prospective Acquirers, subject to customary confidentiality assurances, all information and documents relating to the Divestiture Assets customarily provided in a due diligence process, except information or documents subject to the attorney-client privilege or work-product doctrine. Defendants must make available such information to the United States at the same time that such information is made available to any other person.
D. Defendants must provide Acquirer and the United States with reasonable access to Relevant Employees and with organization charts and all information relating to Relevant Employees, including name, job title, past experience relating to the Divestiture Assets, responsibilities, training and educational history, relevant certifications, and to the extent permissible by law, job performance evaluations, and current salary and benefits information, to enable Acquirer to make offers of employment. Upon request, Defendants must promptly make Relevant Employees available for interviews with Acquirer during normal business hours at a mutually agreeable location and will not interfere with efforts by Acquirer to employ Relevant Employees, such as by offering to increase the salary or benefits of Relevant Employees other than as part of a company-wide increase in salary or benefits granted in the ordinary course of business. Defendants' obligations under this paragraph will expire ninety (90) calendar days after the divestiture of the Divestiture Assets under Paragraph IV(A).
E. For any Relevant Employees who elect employment with Acquirer in the period provided for by Paragraph IV(D), Defendants must waive all noncompete and nondisclosure agreements, vest all unvested pension and other equity rights, and provide all other benefits that the Relevant Employees would generally be provided if transferred to a buyer of an ongoing business. For a period of twelve (12) months from the filing of the Complaint in this matter, Defendants may not solicit to hire, or hire, any Relevant Employee who was hired by Acquirer, unless: (1) The individual is terminated or laid off by Acquirer; or (2) Acquirer agrees in writing that Defendants may solicit or hire that individual. Nothing in Paragraphs IV(D) and (E) prohibits Defendants from maintaining any reasonable restrictions on the disclosure by any Relevant Employee who accepts an offer of employment with Acquirer of the Defendant's proprietary non-public
F. Defendants must permit prospective Acquirers of the Divestiture Assets to have reasonable access to make inspections of the physical facilities of the Divestiture Assets, the Divested Lines, and the Divested Fitment Equipment, wherever located; access to any and all environmental, zoning, and other permit documents and information; and access to any and all financial, operational, or other documents and information customarily provided as part of a due diligence process.
G. Defendants must warrant to Acquirer that each asset will be fully operational on the date of sale.
H. Defendants will not take any action that will impede in any way the permitting, operation, or divestiture of the Divestiture Assets.
I. Defendants must make best efforts to assign, subcontract, or otherwise transfer all contracts related to the Divestiture Assets, including all supply and sales contracts, to Acquirer. Defendants must not interfere with any negotiations between Acquirer and a contracting party.
J. Within one-hundred and eighty (180) calendar days after the Court's entry of the Asset Preservation Stipulation and Order in this matter, Defendants must ensure that the Divested Fitment Equipment is relocated to, and fully operational at, one or more locations as specified by Acquirer.
K. At the option of Acquirer, Defendants must enter into a supply agreement for the manufacture of fitments for the Rapak Business sufficient to meet Acquirer's needs, as determined by Acquirer, for a period of up to six (6) months. Upon Acquirer's request, the United States, in its sole discretion, may approve one or more extensions of this supply agreement, for a total of up to an additional six (6) months. If Acquirer seeks an extension of the term of this supply agreement, Defendants must notify the United States in writing at least one (1) month prior to the date the supply agreement expires. The terms and conditions of any contractual arrangement meant to satisfy this provision must be reasonably related to market conditions for the Rapak Business.
L. At the option of Acquirer, Defendants must enter into a transition services agreement for service and support relating to the Rapak Business for a period of up to twelve (12) months. The United States, in its sole discretion, may approve one or more extensions of this transition services agreement, for a total of up to an additional six (6) months. If Acquirer seeks an extension of the term of this transition services agreement, Defendants must notify the United States in writing at least one (1) month prior to the date the agreement expires. The terms and conditions of any contractual arrangement meant to satisfy this provision must be reasonably related to market conditions for the services provided. The employee(s) of Defendants tasked with providing these transition services must not share any competitively sensitive information of Acquirer with any other employee of Defendants.
M. Defendants must warrant to Acquirer: (1) That there are no material defects in the environmental, zoning, or other permits pertaining to the operation of the Divestiture Assets; and (2) that following the sale of the Divestiture Assets, Defendants will not undertake, directly or indirectly, any challenges to the environmental, zoning, or other permits relating to the operation of the Divestiture Assets.
N. Unless the United States otherwise consents in writing, the divestiture pursuant to Section IV or by a Divestiture Trustee appointed pursuant to Section V of this Final Judgment must include the entire Divestiture Assets and must be accomplished in such a way as to satisfy the United States, in its sole discretion, that the Divestiture Assets can and will be used by Acquirer as part of a viable, ongoing business in the development, manufacture, and sale of BiB Products for dairy, post-mix, smoothie, and wine. It must be demonstrated to the sole satisfaction of the United States that the Divestiture Assets will remain viable and that the divestiture of such assets will remedy the competitive harm alleged in the Complaint. If any of the terms of an agreement between Defendants and Acquirer to effectuate the divestitures required by the Final Judgment varies from the terms of this Final Judgment then, to the extent that Defendants cannot fully comply with both terms, this Final Judgment will determine Defendants' obligations. The divestitures, whether pursuant to Section IV or Section V of this Final Judgment:
(1) Must be made to an Acquirer that, in the United States' sole judgment, has the intent and capability (including the necessary managerial, operational, technical, and financial capability) of competing effectively in the business in the development, manufacture, and sale of BiB Products for dairy, post-mix, smoothie, and wine; and
(2) must be accomplished so as to satisfy the United States, in its sole discretion, that none of the terms of any agreement between an Acquirer and Defendants give Defendants the ability unreasonably to raise Acquirer's costs, to lower Acquirer's efficiency, or otherwise to interfere in the ability of Acquirer to compete effectively.
A. If Defendants have not divested the Divestiture Assets within the time period specified in Paragraph IV(A), Defendants must notify the United States of that fact in writing. Upon application of the United States, the Court shall appoint a Divestiture Trustee selected by the United States and approved by the Court to effect the divestiture of the Divestiture Assets.
B. After the appointment of a Divestiture Trustee becomes effective, only the Divestiture Trustee will have the right to sell the Divestiture Assets. The Divestiture Trustee will have the power and authority to accomplish the divestiture to an Acquirer acceptable to the United States, in its sole discretion, at such price and on such terms as are then obtainable upon reasonable effort by the Divestiture Trustee, subject to the provisions of Sections IV, V, and VI of this Final Judgment, and will have such other powers as the Court deems appropriate. Subject to Paragraph V(D) of this Final Judgment, the Divestiture Trustee may hire at the cost and expense of Defendants any agents or consultants, including, but not limited to, investment bankers, attorneys, and accountants, who will be solely accountable to the Divestiture Trustee, reasonably necessary in the Divestiture Trustee's judgment to assist in the divestiture. Any such agents or consultants will serve on such terms and conditions as the United States approves, including confidentiality requirements and conflict of interest certifications.
C. Defendants will not object to a sale by the Divestiture Trustee on any ground other than the Divestiture Trustee's malfeasance. Any such objections by Defendants must be conveyed in writing to the United States and the Divestiture Trustee within ten (10) calendar days after the Divestiture Trustee has provided the notice required under Section VI.
D. The Divestiture Trustee will serve at the cost and expense of Defendants pursuant to a written agreement, on such terms and conditions as the United States approves, including confidentiality requirements and conflict of interest certifications. The Divestiture Trustee will account for all
E. Defendants must use their best efforts to assist the Divestiture Trustee in accomplishing the required divestiture. The Divestiture Trustee and any agents or consultants retained by the Divestiture Trustee must have full and complete access to the personnel, books, records, and facilities of the business to be divested, and Defendants must provide or develop financial and other information relevant to such business as the Divestiture Trustee may reasonably request, subject to reasonable protection for trade secrets; other confidential research, development, or commercial information; or any applicable privileges. Defendants will take no action to interfere with or to impede the Divestiture Trustee's accomplishment of the divestiture.
F. After its appointment, the Divestiture Trustee will file monthly reports with the United States setting forth the Divestiture Trustee's efforts to accomplish the divestiture ordered under this Final Judgment. Such reports will include the name, address, and telephone number of each person who, during the preceding month, made an offer to acquire, expressed an interest in acquiring, entered into negotiations to acquire, or was contacted or made an inquiry about acquiring any interest in the Divestiture Assets and will describe in detail each contact with any such person. The Divestiture Trustee will maintain full records of all efforts made to divest the Divestiture Assets.
G. If the Divestiture Trustee has not accomplished the divestiture ordered under this Final Judgment within six (6) months after its appointment, the Divestiture Trustee will promptly file with the Court a report setting forth: (1) The Divestiture Trustee's efforts to accomplish the required divestiture; (2) the reasons, in the Divestiture Trustee's judgment, why the required divestiture has not been accomplished; and (3) the Divestiture Trustee's recommendations. To the extent such reports contain information that the Divestiture Trustee deems confidential, such reports will not be filed in the public docket of the Court. The Divestiture Trustee will at the same time furnish such report to the United States, which will have the right to make additional recommendations consistent with the purpose of the trust. The Court thereafter shall enter such orders as it deems appropriate to carry out the purpose of the Final Judgment, which may, if necessary, include extending the trust and the term of the Divestiture Trustee's appointment by a period requested by the United States.
H. If the United States determines that the Divestiture Trustee has ceased to act or failed to act diligently or in a reasonably cost-effective manner, the United States may recommend the Court appoint a substitute Divestiture Trustee.
A. Within two (2) business days following execution of a definitive divestiture agreement, Defendants or the Divestiture Trustee, whichever is then responsible for effecting the divestiture required herein, must notify the United States of any proposed divestiture required by Section IV or Section V of this Final Judgment. If the Divestiture Trustee is responsible, it will similarly notify Defendants. The notice must set forth the details of the proposed divestiture and list the name, address, and telephone number of each person not previously identified who offered or expressed an interest in or desire to acquire any ownership interest in the Divestiture Assets, together with full details of the same.
B. Within fifteen (15) calendar days of receipt by the United States of such notice, the United States may request from Defendants, the proposed Acquirer, any other third party, or the Divestiture Trustee, if applicable, additional information concerning the proposed divestiture, the proposed Acquirer, and any other potential Acquirer. Defendants and the Divestiture Trustee must furnish any additional information requested within fifteen (15) calendar days of the receipt of the request, unless the parties otherwise agree.
C. Within thirty (30) calendar days after receipt of the notice or within twenty (20) calendar days after the United States has been provided the additional information requested from Defendants, the proposed Acquirer, any third party, and the Divestiture Trustee, whichever is later, the United States will provide written notice to Defendants and the Divestiture Trustee, if there is one, stating whether or not, in its sole discretion, it objects to Acquirer or any other aspect of the proposed divestiture. If the United States provides written notice that it does not object, the divestiture may be consummated, subject only to Defendants' limited right to object to the sale under Paragraph V(C) of this Final Judgment. Absent written notice that the United States does not object to the proposed Acquirer or upon objection by the United States, a divestiture proposed under Section IV or Section V must not be consummated. Upon objection by Defendants under Paragraph V(C), a divestiture proposed under Section V must not be consummated unless approved by the Court.
Defendants must not finance all or any part of any purchase made pursuant to Section IV or Section V of this Final Judgment.
Until the divestiture required by this Final Judgment has been accomplished, Defendants must take all steps necessary to comply with the Asset Preservation Stipulation and Order entered by the Court. Defendants will take no action that would jeopardize the divestiture ordered by the Court.
A. Within twenty (20) calendar days of the filing of the Complaint in this matter, and every thirty (30) calendar days thereafter until the divestiture has been completed under Section IV or Section V, Defendants must deliver to the United States an affidavit, signed by each Defendant's Chief Financial Officer and highest-ranking officer or partner, which must describe the fact and manner of Defendants' compliance with Section IV or Section V of this Final Judgment. Each such affidavit must
B. Within twenty (20) calendar days of the filing of the Complaint in this matter, Defendants must deliver to the United States an affidavit that describes in reasonable detail all actions Defendants have taken and all steps Defendants have implemented on an ongoing basis to comply with Section VIII of this Final Judgment. Defendants must deliver to the United States an affidavit describing any changes to the efforts and actions outlined in Defendants' earlier affidavits filed pursuant to this Section within fifteen (15) calendar days after the change is implemented.
C. Defendants must keep all records of all efforts made to preserve and divest the Divestiture Assets until one (1) year after such divestiture has been completed.
A. For the purposes of determining or securing compliance with this Final Judgment, or of any related orders such as any Asset Preservation Stipulation and Order or of determining whether the Final Judgment should be modified or vacated, and subject to any legally-recognized privilege, from time to time authorized representatives of the United States, including agents retained by the United States, must, upon written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division and on reasonable notice to Defendants, be permitted:
(1) Access during Defendants' office hours to inspect and copy or, at the option of the United States, to require Defendants to provide electronic copies of all books, ledgers, accounts, records, data, and documents in the possession, custody, or control of Defendants relating to any matters contained in this Final Judgment; and
(2) to interview, either informally or on the record, Defendants' officers, employees, or agents, who may have their individual counsel present, regarding such matters. The interviews must be subject to the reasonable convenience of the interviewee and without restraint or interference by Defendants.
B. Upon the written request of an authorized representative of the Assistant Attorney General in charge of the Antitrust Division, Defendants must submit written reports or response to written interrogatories, under oath if requested, relating to any of the matters contained in this Final Judgment as may be requested.
C. No information or documents obtained by the means provided in Section X will be divulged by the United States to any person other than an authorized representative of the executive branch of the United States, except in the course of legal proceedings to which the United States is a party (including grand jury proceedings), for the purpose of securing compliance with this Final Judgment, or as otherwise required by law.
D. If at the time that Defendants furnish information or documents to the United States, Defendants represent and identify in writing the material in any such information or documents to which a claim of protection may be asserted under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure, and Defendants mark each pertinent page of such material, “Subject to claim of protection under Rule 26(c)(1)(G) of the Federal Rules of Civil Procedure,” then the United States will give Defendants ten (10) calendar days' notice prior to divulging such material in any legal proceeding (other than a grand jury proceeding).
Defendants may not reacquire any part of the Divestiture Assets during the term of this Final Judgment.
The Court retains jurisdiction to enable any party to this Final Judgment to apply to the Court at any time for further orders and directions as may be necessary or appropriate to carry out or construe this Final Judgment, to modify any of its provisions, to enforce compliance, and to punish violations of its provisions.
A. The United States retains and reserves all rights to enforce the provisions of this Final Judgment, including the right to seek an order of contempt from the Court. Defendants agree that in any civil contempt action, any motion to show cause, or any similar action brought by the United States regarding an alleged violation of this Final Judgment, the United States may establish a violation of this Final Judgment and the appropriateness of any remedy therefor by a preponderance of the evidence, and Defendants waive any argument that a different standard of proof should apply.
B. This Final Judgment should be interpreted to give full effect to the procompetitive purposes of the antitrust laws and to restore the competition the United States alleged was harmed by the challenged conduct. Defendants agree that they may be held in contempt of, and that the Court may enforce, any provision of this Final Judgment that, as interpreted by the Court in light of these procompetitive principles and applying ordinary tools of interpretation, is stated specifically and in reasonable detail, whether or not it is clear and unambiguous on its face. In any such interpretation, the terms of this Final Judgment should not be construed against either party as the drafter.
C. In any enforcement proceeding in which the Court finds that Defendants have violated this Final Judgment, the United States may apply to the Court for a one-time extension of this Final Judgment, together with other relief as may be appropriate. In connection with any successful effort by the United States to enforce this Final Judgment against a Defendant, whether litigated or resolved before litigation, that Defendant agrees to reimburse the United States for the fees and expenses of its attorneys, as well as any other costs, including experts' fees, incurred in connection with that enforcement effort, including in the investigation of the potential violation.
D. For a period of four (4) years following the expiration of the Final Judgment, if the United States has evidence that a Defendant violated this Final Judgment before it expired, the United States may file an action against that Defendant in this Court requesting that the Court order: (1) Defendant to comply with the terms of this Final Judgment for an additional term of at least four years following the filing of the enforcement action under this Section; (2) any appropriate contempt remedies; (3) any additional relief needed to ensure Defendant complies with the terms of the Final Judgment; and (4) fees or expenses as called for in Paragraph XIII(C).
Unless the Court grants an extension, this Final Judgment will expire ten (10) years from the date of its entry, except that after five (5) years from the date of its entry, this Final Judgment may be terminated upon notice by the United States to the Court and Defendants that the divestitures have been completed and that the continuation of the Final Judgment no longer is necessary or in the public interest.
Entry of this Final Judgment is in the public interest. The parties have complied with the requirements of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16, including making copies available to the public of this Final Judgment, the Competitive Impact Statement, any comments thereon, and the United States' responses to comments. Based upon the record before the Court, which includes the Competitive Impact Statement and any comments and responses to comments filed with the Court, entry of this Final Judgment is in the public interest.
1. Production Line R01 (located at the Romeoville Plant);
2. Production Line R02 (located at the Romeoville Plant);
3. Production Line R12 (located at the Romeoville Plant);
4. Production Line UC01 (located at the Union City Plant);
5. Production Line UC03 (located at the Union City Plant);
6. Production Line N03 (located at the Indianapolis Plant); and
7. Production Line N04 (located at the Indianapolis Plant).
1. Injection Molding Machine (“IM”) 96 (located at the Worldwide Dispensers location at 78 2nd Avenue S, Lester Prairie, Minnesota 55354 (“Lester Prairie Plant”));
2. IM 542 (located at the Lester Prairie Plant);
3. IM 747 (located at the Lester Prairie Plant);
4. IM 599 (located at the Lester Prairie Plant);
5. IM 345 (located at the Lester Prairie Plant);
6. IM 515 (located at the Lester Prairie Plant);
7. IM 583 (located at the Worldwide Dispensers location at 595 Territorial Drive, Bolingbrook, Illinois 60440 (“Bolingbrook Plant”);
8. IM 373 (located at the Bolingbrook Plant);
9. IM 294 (located at the Bolingbrook Plant); and
10. IM 80 (located at the Bolingbrook Plant).
The United States of America, under Section 2(b) of the Antitrust Procedures and Penalties Act, 15 U.S.C. 16(b)-(h) (the “APPA” or “Tunney Act”), files this Competitive Impact Statement relating to the proposed Final Judgment submitted for entry in this civil antitrust proceeding.
On March 5, 2019, Defendant Olympus Growth Fund VI, L.P. (“Olympus”), through its portfolio company Defendant Liqui-Box, Inc. (“Liqui-Box”), agreed to acquire Defendant DS Smith plc's (“DS Smith”) Plastics Division (“DS Smith Plastics”) for approximately $500 million, making the combined company one of the largest bag-in-box (“BiB”) suppliers in the United States. The United States filed a civil antitrust Complaint on February 19, 2020, seeking to enjoin the proposed acquisition. The Complaint alleges that the likely effect of this acquisition would be to substantially lessen competition for the development, manufacture, and sale of dairy, post-mix, smoothie, and wine BiBs in the United States, in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
At the same time the Complaint was filed, the United States filed an Asset Preservation Stipulation and Order (“APSO”) and proposed Final Judgment, which are designed to address the anticompetitive effects of the acquisition. Under the proposed Final Judgment, which is explained more fully below, the Defendants are required to divest all of DS Smith's product lines that overlap with product lines offered by Liqui-Box in the United States, including its dairy, post-mix, smoothie, and wine BiB product lines. Under the terms of the APSO, the Defendants must take certain steps to ensure that the divested assets are preserved and operated in such a way as to ensure that the products and services produced by or sold under the divested assets continue to be ongoing, economically viable competitive product lines.
The United States and the Defendants have stipulated that the proposed Final Judgment may be entered after compliance with the APPA. Entry of the proposed Final Judgment will terminate this action, except that the Court will retain jurisdiction to construe, modify, or enforce the provisions of the proposed Final Judgment and to punish violations thereof.
Olympus, a fund managed by private equity firm Olympus Partners, is a Delaware limited partnership with headquarters in Stamford, Connecticut. In 2018, Olympus Partners had approximately $8.5 billion total capital under management between its different funds, with Olympus comprising approximately $2.3 billion of that total. Liqui-Box, a company owned by Olympus, is a Delaware corporation with headquarters in Richmond, Virginia. Liqui-Box is a global manufacturer of packaging and packaging equipment, including BiBs, with four U.S. manufacturing facilities, as well as additional facilities across the world. In 2018, Liqui-Box had total sales of $177 million, including approximately $123 million in the United States.
DS Smith is a United Kingdom public limited company with headquarters in London, England. DS Smith is a global manufacturer of packaging, packaging equipment, and recycled paper. DS Smith Plastics manufactures flexible packaging and dispensing solutions, rigid packaging, injection-molded products, and foam products. Among DS Smith Plastics' flexible packaging products are BiBs, which are primarily sold under the Rapak brand name in the United States. DS Smith Plastics has its U.S. headquarters in Romeoville, Illinois, and operates five plants in the United States, as well as additional plants across the world. In 2018, DS Smith Plastics had total sales of $479 million, including approximately $137 million in sales of BiBs and other goods in the United States.
Pursuant to a Stock Purchase Agreement dated March 5, 2019, Liqui-Box agreed to acquire DS Smith Plastics for approximately $500 million.
BiBs are used to store and dispense liquids such as milk, post-mix,
The flexible plastic bag component of a BiB is typically made up of one to five layers of film. The films are most often made of polyethylene (“PE”), but also can be made with ethylene vinyl alcohol (“EVOH”) or other materials, and are bound together using heat sealing. Customers require different numbers and types of layers to meet individual product demands. For example, the most basic bags consist of a single layer of PE that secures the liquid during transport. More sophisticated bags have additional layers of engineered film that add durability, metallization, and oxygen, moisture, or temperature resistance.
The fitment component of a BiB typically is made from resin using injection molding and attached to the flexible plastic bag component via heat sealing. The design of the fitment is determined by the liquid that will go into the bag and the method that will be used to dispense the liquid out of the bag. For example, if the BiB is used to dispense post-mix into a soda dispenser, the fitment will be designed to attach to a soda dispenser. The simplest fitment is a basic cap, which can be flipped off or unscrewed to pour out the liquid. Highly engineered fitments can have specialized elements such as a built-in push-tap feature or an oxygen barrier to provide resistance to the elements. Fitments are often protected by patents due to the specialized nature and high degree of engineering that can be required in fitment manufacturing.
BiBs are shipped to the customer, who fills the BiB with liquid using a filler machine that the customer typically purchases or leases from the BiB supplier. The customer then ships the filled BiB to a store, restaurant, or other food processor. For example, a post-mix manufacturer seeking to distribute its post-mix to a convenience store would purchase BiBs and a filler machine from a BiB supplier, fill the BiBs with the post-mix at its own facility, and then ship the filled BiBs to the convenience store for use in the convenience store's dispensing machine.
BiBs are distinct from and have numerous advantages over other forms of packaging. For example, compared to rigid containers (
BiBs for dairy products hold liquids such as ice cream mix, yogurt, milk, and cream. Dairy BiBs are typically durable bags made from PE and often have a flip-cap or screw-off cap fitment. Dairy BiBs are designed to reduce the risk of contamination and extend shelf life.
As alleged in the Complaint, there are no substitutes for dairy BiBs. Dairy BiBs provide dairy liquids to customers in an easy to use, inexpensive format that other packaging does not offer. For example, rigid containers require more storage space, may not keep the dairy liquid as fresh, and may have a higher risk of contamination. BiBs for other end uses cannot be substituted for dairy BiBs due to the unique specifications for dairy BiBs.
The Complaint alleges that in the event of a small but significant non-transitory price increase for dairy BiBs, customers would not substitute away from dairy BiBs in a sufficient volume to make the price increase unprofitable. Therefore, the Complaint alleges that the development, manufacture, and sale of dairy BiBs is a relevant product market and line of commerce within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.
Post-mix BiBs hold concentrated drink mixes such as soda syrup and juice concentrates. These concentrates are often mixed with carbonated or non-carbonated water before being served. Post-mix BiBs are typically made with layers of PE or EVOH and a fitment that attaches to a drink dispensing machine. Bags used for post-mix must be very strong to accommodate high filling flow rates required by post-mix manufacturers. Post-mix BiBs are designed to maintain freshness and ensure all liquid is dispensed from the bag while minimizing leaks and spills and accurately dispensing the product.
The Complaint alleges that there are no substitutes for post-mix BiBs. Post-mix BiBs must attach to a dispensing machine, which a rigid container cannot do. Moreover, BiBs for other end uses cannot be substituted for post-mix BiBs due to the unique fitments and bag design required for post-mix BiBs.
As further alleged in the Complaint, in the event of a small but significant non-transitory price increase for post-mix BiBs, customers would not substitute away from post-mix BiBs in a sufficient volume to make the price increase unprofitable. Therefore, the Complaint alleges that the development, manufacture, and sale of post-mix BiBs is a relevant product market and line of commerce within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.
Smoothie BiBs hold mixes and other ingredients for smoothies and other drinks. Smoothie BiBs are typically made with layers of PE that offer low oxygen permeability. Like post-mix BiBs, most fitments on smoothie BiBs are designed to be attached to dispensing machines and are highly specialized for the particular types of machines they attach to. A smoothie BiB typically has a special cap into which a probe is inserted in order to dispense the liquid. Smoothie BiBs are designed to maintain the safety and freshness of the liquid, protect the taste and quality of these flavor-sensitive liquids, and reduce the risk of contamination.
According to the Complaint, there are no substitutes for smoothie BiBs. Rigid containers cannot be attached to the dispensing machines smoothie BiBs are used in. Further, rigid containers are more expensive and bulkier to transport, may not keep the liquid as fresh, and may have a higher risk of contamination. Moreover, BiBs for other end uses cannot be substituted for smoothie BiBs due to the unique specifications required for smoothie BiBs. Fitments for smoothie BiBs, for example, often are designed to specifically interact with the dispensing machines.
The Complaint alleges that in the event of a small but significant non-transitory price increase for smoothie BiBs, customers would not substitute away from smoothie BiBs in a sufficient volume to make the price increase unprofitable. Therefore, the Complaint alleges that the development, manufacture, and sale of smoothie BiBs is a relevant product market and line of commerce within the meaning of
Wine BiBs hold the wine inside of boxed wines, which are often sold in retail outlets. The bag component of wine BiBs is typically made from PE and EVOH and is designed to protect against oxidation and UV light. The fitment for wine BiBs is typically a push, pull, or twist tap that is specifically designed to avoid allowing oxygen into the bag when the wine is dispensed. This provides a longer shelf life for wine once opened as compared to traditional bottles. Because the fitments for wine BiBs are operated directly by individuals, they must be simple to operate and user friendly.
As alleged in the Complaint, there are no substitutes for wine BiBs. BiBs for other end uses cannot be substituted for wine BiBs due to the unique specifications for wine BiBs. Both the bag and fitment are specially engineered to provide an oxygen barrier for the product that other BiBs typically do not provide. Bags and fitments that lack this specialized oxygen barrier would allow oxygen to seep in and degrade the wine, making it unsuitable for consumption after only a short time. Wine bottles are not adequate substitutes for wine BiBs. A wine BiB can keep wine fresh for up to four weeks after it is opened, significantly longer than a wine bottle can. Also, wine BiBs provide faster and more sanitary pouring for food service operators than bottles do, with no risk of broken glass.
According to the Complaint, in the event of a small but significant non-transitory price increase for wine BiBs, customers would not substitute away from wine BiBs in a sufficient volume to make the price increase unprofitable. Therefore, the Complaint alleges that the development manufacture, and sale of wine BiBs is a relevant product market and line of commerce within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.
The Complaint alleges that customers in the United States do not purchase dairy, post-mix, smoothie, and wine BiBs (collectively, the “Relevant BiB Products”) from suppliers located outside the United States. Shipping these products from outside the United States generally would not be economical because the shipping costs are too large relative to the cost of the BiB itself. In addition, BiBs manufactured and sold outside the United States often have different specifications than those manufactured and sold in the United States due to, for example, differences in the liquids stored in the BiBs or differences in dispensing machines. Further, according to the Complaint, it is important for a supplier of BiBs in the United States to be able to timely provide service to its customers who have issues with the BiBs, such as leakage or breakage of the bags or problems with the attachment of the BiBs to the filler machines. Suppliers located outside the United States do not have employees located in the United States to timely service BiB customers in the United States.
The Complaint alleges that, in the event of a small but significant non-transitory increase in the price of the Relevant BiB Products, customers in the United States would not procure these products from suppliers located outside the United States in a sufficient volume to make such a price increase unprofitable. Accordingly, the Complaint alleges that the United States is a relevant geographic market within the meaning of Section 7 of the Clayton Act, 15 U.S.C. 18.
The Complaint alleges that Liqui-Box, DS Smith, and one other company are the only significant suppliers of dairy, post-mix, and smoothie BiBs to customers located in the United States. It also alleges that Liqui-Box and DS Smith are two of only four suppliers of wine BiBs to customers located in the United States.
According to the Complaint, Liqui-Box and DS Smith compete vigorously with one another on the basis of price, quality, and service in the markets for the Relevant BiB Products in the United States. Competition between Liqui-Box and DS Smith has fostered innovation and led to the development of new types of BiBs and product features. The proposed acquisition would eliminate the substantial head-to-head competition between Liqui-Box and DS Smith and the benefits that customers have realized from that competition in the form of lower prices, better quality and service, and innovation. By eliminating DS Smith as a competitor in the development, manufacture, and sale of the Relevant BiB Products in the United States, the proposed acquisition of DS Smith Plastics would substantially increase the likelihood that Liqui-Box would increase prices, reduce quality and service, and diminish investment in research and development below what it would have been absent the acquisition.
According to the Complaint, the proposed acquisition, therefore, would likely substantially lessen competition in the development, manufacture, and sale of the Relevant BiB Products in the United States in violation of Section 7 of the Clayton Act, 15 U.S.C. 18.
The Complaint alleges that entry into the development, manufacture, and sale of the Relevant BiB Products would not be timely, likely, or sufficient to prevent the harm to competition caused by Liqui-Box's proposed acquisition of DS Smith Plastics.
According to the Complaint, entry into the markets for the Relevant BiB Products is costly and time consuming. Significant upfront capital expenditures are required to enter. The machinery to manufacture BiBs, including injection molding machines for the fitments and production lines that seal the bags and attach the fitments, is expensive and highly engineered. Manufacturing BiBs in accordance with customer requirements requires skilled employees and industry know-how that can take years to establish. Further, customers demand that suppliers have a proven ability to supply BiBs with the required specifications so that their BiBs do not leak or break and are able to store the liquids for the required amount of time without spoiling. This reputation for having a quality product takes significant time to build. Finally, a new entrant would need to hire trained technicians capable of providing timely service to customers when BiBs leak, break, or encounter other product quality issues.
The divestiture required by the proposed Final Judgment will remedy the loss of competition alleged in the Complaint by establishing an independent and economically viable competitor with the scale and scope to compete effectively in the markets for the Relevant BiB Products in the United States. Paragraph IV(A) of the proposed Final Judgment requires the Defendants to divest DS Smith Plastics' Rapak Business within 45 calendar days of the Court's entry of the APSO to TriMas Corporation or another acquirer acceptable to the United States in its sole discretion.
Paragraph IV(B) of the proposed Final Judgment requires that, prior to the divestiture, the Defendants must relocate any divested production lines that are currently located at DS Smith Plastics' Romeoville, Illinois production facility—a facility that is not being divested—to one or more of the production facilities included in the divestiture, with the specific facility to be determined by the acquirer. Defendants have both previously moved production lines for independent business reasons with little to no disruption in production or supply. The Defendants must also ensure that the divested production lines are fully operational in their new locations at the time of the closing of the divestiture. Three of the divested production lines are currently located at DS Smith Plastics' Romeoville facility. These production lines are to be moved to the divested production facilities and divested because they are used primarily for the manufacture of the Relevant BiB Products. In addition, Paragraph IV(J) requires that within 180 days after the Court's entry of the APSO, the Defendants must ensure that the fitment equipment to be divested is relocated to, and fully operational at, a facility or facilities specified by the acquirer.
The proposed Final Judgment contains several provisions to facilitate the immediate use of the divestiture assets by the acquirer. Paragraph IV(K) of the proposed Final Judgment requires the Defendants, at the acquirer's option, to enter into a supply contract for fitments sufficient to meet all or part of the acquirer's needs for a period of up to six months. Upon the acquirer's request, the United States, in its sole discretion, may approve one or more extensions of any such agreement for a total of up to an additional six (6) months. In addition, Paragraph IV(L) of the proposed Final Judgment requires the Defendants, at the acquirer's option, to enter into a transition services agreement for service and support relating to the Rapak Business for a period of up to twelve months. The paragraph further provides that the United States, in its sole discretion, may approve one or more extensions of this transition services agreement for a total of up to an additional six (6) months. Paragraph IV(L) also provides that employees of the Defendants tasked with providing any transition services must not share any competitively sensitive information of the acquirer with any other employee of the Defendants.
The proposed Final Judgment also contains provisions intended to facilitate the acquirer's efforts to hire employees engaged in the Rapak Business. Paragraph IV(D) of the proposed Final Judgment requires the Defendants to provide the acquirer with organization charts and information relating to these employees and to make them available for interviews, and it provides that the Defendants must not interfere with any negotiations by the acquirer to hire them. In addition, Paragraph IV(E) provides that, for employees who elect employment with the acquirer, the Defendants must waive all noncompete and nondisclosure agreements, vest all unvested pension and other equity rights, and provide all benefits that the employees would generally be provided if transferred to a buyer of an ongoing business. This paragraph further provides that, for a period of 12 months from the filing of the Complaint, the Defendants may not solicit to hire or hire any employee engaged in the Rapak Business who was hired by the acquirer, unless that individual is terminated or laid off by the acquirer or the acquirer agrees in writing that the Defendants may solicit or hire that individual.
If the Defendants do not accomplish the divestiture within the period prescribed in the proposed Final Judgment, Section V of the proposed Final Judgment provides that the Court will appoint a divestiture trustee selected by the United States to effect the divestiture. If a divestiture trustee is appointed, the proposed Final Judgment provides that the Defendants will pay all costs and expenses of the trustee. The divestiture trustee's commission will be structured so as to provide an incentive for the trustee based on the price obtained and the speed with which the divestiture is accomplished. After the divestiture trustee's appointment becomes effective, the trustee will provide periodic reports to the United States setting forth his or her efforts to accomplish the divestiture. At the end of six months, if the divestiture has not been accomplished, the divestiture trustee and the United States will make recommendations to the Court, which will enter such orders as appropriate, in order to carry out the purpose of the trust, including by extending the trust or the term of the divestiture trustee's appointment.
The proposed Final Judgment also contains provisions designed to promote compliance and make the enforcement of the Final Judgment as effective as possible. Paragraph XIII(A) provides that the United States retains and reserves all rights to enforce the provisions of the Final Judgment, including its rights to seek an order of contempt from the Court. Under the terms of this paragraph, the Defendants have agreed that in any civil contempt action, any motion to show cause, or any similar action brought by the United States regarding an alleged violation of the Final Judgment, the United States may establish the violation and the appropriateness of any remedy by a preponderance of the evidence and that the Defendants have waived any argument that a different standard of proof should apply. This provision aligns the standard for compliance obligations with the standard of proof that applies to the underlying offense that the compliance commitments address.
Paragraph XIII(B) provides additional clarification regarding the interpretation of the provisions of the proposed Final Judgment. The proposed Final Judgment was drafted to restore competition the United States alleged would otherwise be harmed by the transaction. The Defendants agree that they will abide by the proposed Final Judgment, and that they may be held in contempt of this
Paragraph XIII(C) of the proposed Final Judgment provides that if the Court finds in an enforcement proceeding that the Defendants have violated the Final Judgment, the United States may apply to the Court for a one-time extension of the Final Judgment, together with such other relief as may be appropriate. In addition, to compensate American taxpayers for any costs associated with investigating and enforcing violations of the Final Judgment, Paragraph XIII(C) provides that in any successful effort by the United States to enforce the Final Judgment against a Defendant, whether litigated or resolved before litigation, that the Defendants will reimburse the United States for attorneys' fees, experts' fees, and other costs incurred in connection with any enforcement effort, including the investigation of the potential violation.
Paragraph XIII(D) states that the United States may file an action against a Defendant for violating the Final Judgment for up to four years after the Final Judgment has expired or been terminated. This provision is meant to address circumstances such as when evidence that a violation of the Final Judgment occurred during the term of the Final Judgment is not discovered until after the Final Judgment has expired or been terminated or when there is not sufficient time for the United States to complete an investigation of an alleged violation until after the Final Judgment has expired or been terminated. This provision, therefore, makes clear that, for four years after the Final Judgment has expired or been terminated, the United States may still challenge a violation that occurred during the term of the Final Judgment.
Finally, Section XIV of the proposed Final Judgment provides that the Final Judgment will expire ten years from the date of its entry, except that after five years from the date of its entry, the Final Judgment may be terminated upon notice by the United States to the Court and the Defendants that the divestiture has been completed and that the continuation of the Final Judgment is no longer necessary or in the public interest.
Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any person who has been injured as a result of conduct prohibited by the antitrust laws may bring suit in federal court to recover three times the damages the person has suffered, as well as costs and reasonable attorneys' fees. Entry of the proposed Final Judgment neither impairs nor assists the bringing of any private antitrust damage action. Under the provisions of Section 5(a) of the Clayton Act, 15 U.S.C. 16(a), the proposed Final Judgment has no prima facie effect in any subsequent private lawsuit that may be brought against the Defendants.
The United States and the Defendants have stipulated that the proposed Final Judgment may be entered by the Court after compliance with the provisions of the APPA, provided that the United States has not withdrawn its consent. The APPA conditions entry upon the Court's determination that the proposed Final Judgment is in the public interest.
The APPA provides a period of at least 60 days preceding the effective date of the proposed Final Judgment within which any person may submit to the United States written comments regarding the proposed Final Judgment. Any person who wishes to comment should do so within 60 days of the date of publication of this Competitive Impact Statement in the
Written comments should be submitted to: Katrina Rouse, Chief, Defense, Industrials, and Aerospace Section, Antitrust Division, U.S. Department of Justice, 450 Fifth Street NW, Suite 8700, Washington, DC 20530.
The proposed Final Judgment provides that the Court retains jurisdiction over this action, and the parties may apply to the Court for any order necessary or appropriate for the modification, interpretation, or enforcement of the Final Judgment.
As an alternative to the proposed Final Judgment, the United States considered a full trial on the merits against the Defendants. The United States could have continued the litigation and sought preliminary and permanent injunctions against Liqui-Box's acquisition of DS Smith Plastics. The United States is satisfied, however, that the divestiture of assets described in the proposed Final Judgment will remedy the anticompetitive effects alleged in the Complaint, preserving competition for the development, manufacture, and sale of dairy, post-mix, smoothie, and wine BiBs in the United States. Thus, the proposed Final Judgment achieves all or substantially all of the relief the United States would have obtained through litigation, but avoids the time, expense, and uncertainty of a full trial on the merits of the Complaint.
The Clayton Act, as amended by the APPA, requires that proposed consent judgments in antitrust cases brought by the United States be subject to a 60-day comment period, after which the Court shall determine whether entry of the proposed Final Judgment “is in the public interest.” 15 U.S.C. 16(e)(1). In making that determination, the Court, in accordance with the statute as amended in 2004, is required to consider:
(A) The competitive impact of such judgment, including termination of alleged violations, provisions for enforcement and modification, duration of relief sought, anticipated effects of alternative remedies actually considered, whether its terms are ambiguous, and any other competitive considerations bearing upon the adequacy of such judgment that the court deems necessary to a determination of whether the consent judgment is in the public interest; and
(B) the impact of entry of such judgment upon competition in the relevant market or markets, upon the public generally and individuals alleging specific injury from the violations set forth in the complaint including consideration of the public benefit, if any, to be derived from a determination of the issues at trial.
15 U.S.C. 16(e)(1)(A) & (B). In considering these statutory factors, the Court's inquiry is necessarily a limited one as the government is entitled to “broad discretion to settle with the defendant within the reaches of the public interest.”
As the U.S. Court of Appeals for the District of Columbia Circuit has held, under the APPA a court considers, among other things, the relationship between the remedy secured and the specific allegations in the government's complaint, whether the proposed Final Judgment is sufficiently clear, whether its enforcement mechanisms are sufficient, and whether it may positively harm third parties.
The United States' predictions about the efficacy of the remedy are to be afforded deference by the Court.
Moreover, the Court's role under the APPA is limited to reviewing the remedy in relationship to the violations that the United States has alleged in its complaint, and does not authorize the Court to “construct [its] own hypothetical case and then evaluate the decree against that case.”
In its 2004 amendments to the APPA, Congress made clear its intent to preserve the practical benefits of using consent judgments proposed by the United States in antitrust enforcement, Public Law 108-237 § 221, and added the unambiguous instruction that “[n]othing in this section shall be construed to require the court to conduct an evidentiary hearing or to require the court to permit anyone to intervene.” 15 U.S.C. 16(e)(2);
There are no determinative materials or documents within the meaning of the APPA that were considered by the United States in formulating the proposed Final Judgment.
* Attorney of Record.
In accordance with Departmental Policy, 28 CFR 50.7, notice is hereby given that a proposed Consent Decree in
This proposed Consent Decree concerns a complaint filed by the United States against George Gradel Co., Inc., and First Energy Nuclear Operating Co., pursuant to Sections 301(a), 309(b), and 309(d) of the Clean Water Act, 33
The Department of Justice will accept written comments relating to this proposed Consent Decree for thirty (30) days from the date of publication of this Notice. Please address comments to Phillip R. Dupré, United States Department of Justice, Environment and Natural Resources Division, Environmental Defense Section, Post Office Box 7611, Washington, DC 20044, and refer to
The proposed Consent Decree may be examined at the Clerk's Office, United States District Court for the Northern District of Ohio, 1716 Spielbusch Avenue, Toledo, OH 43604. In addition, the proposed Consent Decree may be examined electronically at
Copyright Royalty Board (CRB), Library of Congress.
Public notice.
The Copyright Royalty Judges announce receipt of a notice from SoundExchange of SoundExchange's intent to audit the various services, including Commercial Webcaster services, Preexisting Subscription Service(s), New Subscription Service(s), and Business Establishment Service, of Mood Media Corporation and its affiliates for 2017, 2018, and 2019 pursuant to four statutory licenses.
Docket: For access to the docket to read background documents, go to eCRB, the Copyright Royalty Board's electronic filing and case management system, at
Anita Blaine, Program Specialist, by telephone at (202) 707-7658 or by email at
The Copyright Act, title 17 of the United States Code, grants to sound recordings copyright owners the exclusive right to publicly perform sound recordings by means of certain digital audio transmissions, subject to limitations. Specifically, the right is limited by the statutory license in section 114 which allows nonexempt noninteractive digital subscription services, eligible nonsubscription services, pre-existing subscription services, new subscription services, and preexisting satellite digital audio radio services to perform publicly sound recordings by means of digital audio transmissions. 17 U.S.C. 114(f). In addition, a statutory license in section 112 allows a service to make necessary ephemeral reproductions to facilitate the digital transmission of the sound recording, including for transmissions to business establishments. 17 U.S.C. 112(e).
Licensees may operate under these licenses provided they pay the royalty fees and comply with the terms set by the Copyright Royalty Judges. The rates and terms for the section 112 and 114 licenses are set forth in 37 CFR parts 380 and 382-84.
As part of the terms set for these licenses, the Judges designated SoundExchange, Inc., as the Collective,
As the Collective, SoundExchange may, only once a year, conduct an audit of a licensee for any or all of the prior three calendar years in order to verify royalty payments. SoundExchange must first file with the Judges a notice of intent to audit a licensee and deliver the notice to the licensee. 37 CFR 380.6, 382.7, 383.4. 384.6.
On January 29, 2020, SoundExchange filed with the Judges a notice of intent to audit Mood Media Corporation and its affiliates (primarily Muzak LLC and DMX Music) for the years 2017, 2018, and 2019. The Judges must publish notice in the
National Archives and Records Administration (NARA).
Notice of centralized agency guidance portal.
We are announcing that we have established an online centralized portal that includes information about our guidance and a searchable, indexed listing of, and links to, our guidance documents. The portal, located on our website, does not displace other listings of or links to our guidance documents in topic-specific sections of our website.
The portal is online beginning February 28, 2020, although we will be refining it and adding existing guidance through the end of May 2020.
The portal's URL is
Kimberly Keravuori, Regulatory and External Policy Program Manager, by mail at National Archives and Records Administration, Suite 4100, 8601 Adelphi Road, College Park, MD 20740-6001, or by email at
Executive Order 13891, and OMB implementing guidance memorandum M-20-02, require Federal agencies to establish an online, centralized, searchable database of their guidance documents, to include certain identifying information, and to provide information on how to comment on open guidance and how to request revisions to the agency's guidance. They also require agencies to publish notice in the
Although the E.O. and OMB memorandum primarily discuss guidance affecting the public, OMB has clarified that guidance affecting other agencies must also be included in the portal. Most of our guidance pertains to other Federal agencies, including records management guidance, controlled unclassified information
In accordance with the Federal Advisory Committee Act (Pub. L. 92-463, as amended), the National Science Foundation (NSF) announces the following meeting:
Pension Benefit Guaranty Corporation (PBGC).
Notice of availability.
PBGC announces its new guidance document database. Guidance documents currently in effect are accessible through the database.
The database will be publicly available no later than February 28, 2020.
Hilary Duke (
On October 9, 2019, the President issued Executive Order (E.O.) 13891, “Promoting the Rule of Law Through Improved Agency Guidance Documents.” Central principles of E.O. 13891 are that the American public should only be subject to binding rules imposed through duly enacted statutes or through regulations that are lawfully promulgated, and that Americans should have fair notice of any such obligations. To ensure increasing transparency, section 3 of the E.O. requires each agency to establish on its website a single, searchable, indexed database that contains, or links to, all of the agency's “guidance documents,” as defined in the E.O., and provides certain information about them. Accordingly, PBGC has established the required guidance document database at
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend PSX Rule 3506 and Options 9, Section 21, both titled “Anti-Money Laundering Compliance Program.” This rule change is intended to reflect the Financial Crimes Enforcement Network's (“FinCEN”) adoption of a final rule on Customer Due Diligence Requirements for Financial Institutions (“CDD Rule”). Specifically, the proposed amendments would conform PSX Rule 3506 and Options 9, Section 21 to the CDD Rule's amendments to the minimum regulatory requirements for members' anti-money laundering (“AML”) compliance programs by requiring such programs to include risk-based procedures for conducting ongoing customer due diligence. This ongoing customer due diligence element for AML programs includes: (1) Understanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile; and (2) conducting ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.
The Exchange has designated this proposal as “non-controversial” under
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Bank Secrecy Act
• The establishment and implementation of policies, procedures and internal controls reasonably designed to achieve compliance with the applicable provisions of the BSA and implementing regulations;
• independent testing for compliance by broker-dealer personnel or a qualified outside party;
• designation of an individual or individuals responsible for implementing and monitoring the operations and internal controls of the AML program; and
• ongoing training for appropriate persons.
On May 11, 2016, FinCEN, the bureau of the Department of the Treasury responsible for administering the BSA and its implementing regulations, issued the CDD Rule
Specifically, the CDD Rule focuses particularly on the second component by adding a new requirement that covered financial institutions identify and verify the identity of the beneficial owners of all legal entity customers at the time a new account is opened, subject to certain exclusions and exemptions.
On November 21, 2017, FINRA published Regulatory Notice 17-40 to provide guidance to member firms regarding their obligations under FINRA Rule 3310 in light of the adoption of FinCEN's CDD Rule. In addition, the Notice summarized the CDD Rule's impact on member firms, including the addition of the new fifth pillar required for member firms' AML programs. FINRA also amended FINRA Rule 3310 to explicitly incorporate the fifth pillar.
Section 352 of the USA PATRIOT Act of 2001
FinCEN's CDD Rule does not change the requirements of either PSX Rule 3506 or Options 9, Section 21, and members must continue to comply with its requirements.
As stated in the CDD Rule, these provisions are not new and merely codify existing expectations for members to adequately identify and report suspicious transactions as required under the BSA and encapsulate practices generally already undertaken by securities firms to know and understand their customers.
FinCEN states in the CDD Rule that firms must necessarily have an understanding of the nature and purpose of the customer relationship in order to determine whether a transaction is potentially suspicious and, in turn, to fulfill their SAR obligations.
The CDD Rule also addresses the interplay of understanding the nature and purpose of customer relationships with the ongoing monitoring obligation discussed below. The CDD Rule explains that firms are not necessarily required or expected to integrate customer information or the customer risk profile into existing transaction monitoring systems (for example, to serve as the baseline for identifying and assessing suspicious transactions on a contemporaneous basis).
As with the requirement to understand the nature and purpose of the customer relationship, the requirement to conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information, merely adopts existing supervisory and regulatory expectations as explicit minimum standards of customer due diligence required for firms' AML programs.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change simply
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1)
The Exchange proposes certain conforming changes to Rule 9217 in order to more closely align the Exchange's rule with that of its affiliates. The proposed rule change is available on the Exchange's website at
In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change
The Exchange proposes certain conforming changes to Rule 9217 in order to more closely align the Exchange's rule with that of its affiliates.
Rule 9217 sets forth the list of rules under which a member organization or covered person may be subject to a fine under a minor rule violation plan as described in proposed [sic] Rule 9216(b). The Exchange proposes the following amendments to Rule 9217.
First, the Exchange proposes to add the following paragraph to the introduction to Rule 9217:
Nothing in this Rule shall require the Exchange to impose a fine for a violation of any rule under this Minor Rule Plan. If the Exchange determines that any violation is not minor in nature, the Exchange may, at its discretion, proceed under the Rule 9000 Series rather than under this Rule.
The language is based on the rules of the Exchange's affiliates New York Stock Exchange LLC (“NYSE”) and NYSE Arca, Inc. (“NYSE Arca”).
Second, the Exchange proposes to add subsections (a), (b)(1) and (b)(5) of Rule 3110—Equities to the list of rules in Rule 9217 eligible for disposition pursuant to a fine under Rule 9216(b).
Rule 3110—Equities is the Exchange's supervision rule for equities trading. Rule 3110(a)—Equities governs supervisory systems and requires member organizations to establish and maintain a system to supervise the activities of each associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable Exchange rules.
Subsection (b)(1) governs written procedures and requires member organizations to establish, maintain, and enforce written procedures to supervise the types of business in which it engages and the activities of its associated persons that are reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable Exchange rules.
Subsection (b)(5) requires a member organization's supervisory procedures to include procedures to capture, acknowledge, and respond to all written (including electronic) customer complaints.
Rule 3110—Equities is substantially similar to NYSE Rule 3110. Subsections (a), (b)(1) and b(5) of NYSE Rule 3110 are each separately eligible for a minor rule fine under NYSE Rule 9217.
Finally, the Exchange proposes to correct a typographical error in Rule 9217(ii)(7)(b), which refers to ensuring compliance with, among other things, NYSE Arca Rules. The correct reference should be to the NYSE American Rules.
The proposed rule change is consistent with Section 6(b) of the Act,
Minor rule fines provide a meaningful sanction for minor or technical violations of rules. The Exchange believes that the proposed rule change will strengthen the Exchange's ability to carry out its oversight and enforcement responsibilities in cases where full disciplinary proceedings are unwarranted in view of the minor nature of the particular violation. Specifically, the proposed rule change is designed to prevent fraudulent and manipulative acts and practices because it will provide the Exchange the ability to issue a minor rule fine for violations of its rules governing supervision requirements in situations where either a cautionary action letter or a more formal disciplinary action may not be warranted or appropriate.
In addition, the Exchange believes that adding rules based on the rules of its affiliate to the Exchange's minor rule plan would promote fairness and consistency in the marketplace by permitting the Exchange to issue a minor rule fine for violations of substantially similar rules that are eligible for minor rule treatment on the Exchange's affiliate, thereby harmonizing minor rule plan fines across affiliated exchanges for the same conduct. As noted above, Rule 3110—Equities is substantially similar to NYSE Rule 3110. Subsections (a), (b)(1) and b(5) of NYSE Rule 3110 are each separately eligible for a minor rule fine under NYSE Rule 9217.
The Exchange further believes that the proposed amendments to Rule 9217 are consistent with Section 6(b)(6) of the Act,
Finally, the Exchange also believes that correction of a typographical error would remove impediments to and perfect the mechanism of a free and open market by ensuring that persons subject to the Exchange's jurisdiction, regulators, and the investing public can more easily navigate and understand the Exchange's rulebook.
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed change is not designed to address any competitive issue but rather to update the Exchange's rules to strengthen the Exchange's ability to carry out its oversight and enforcement functions and deter potential violative conduct.
No written comments were solicited or received with respect to the proposed rule change.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act.
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.
As stated above, the Exchange proposes to add to its list of equities rule violations rules that are identical to those of its affiliated exchange. The Commission believes that the proposed rule provides a reasonable means of addressing violations that do not rise to the level of requiring formal disciplinary proceedings, while providing greater flexibility in handling certain violations. However, the Commission expects, as suggested by the Exchange's proposed introduction to its Rule 9217, that the Exchange will continue to conduct surveillance with due diligence and make determinations based on its findings, on a case-by-case basis, regarding whether a sanction under the rule is appropriate, or whether a violation requires formal disciplinary action. The Commission further notes that, as before, the Exchange must give the Commission prompt notice of any violation with sanction over $2,500, in accordance with Securities Exchange Act Rule 19d-1(c).
For the same reasons discussed above, the Commission finds good cause, pursuant to Section 19(b)(2) of the Act,
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend Options 9, Section 21, “Anti-Money Laundering Compliance Program.” This rule change is intended to reflect the Financial Crimes Enforcement Network's (“FinCEN”) adoption of a final rule on Customer Due Diligence Requirements for Financial Institutions (“CDD Rule”). Specifically, the proposed amendments would conform Options 9, Section 21 to the CDD Rule's amendments to the minimum regulatory requirements for Members' anti-money laundering (“AML”) compliance programs by requiring such programs to include risk-based procedures for conducting ongoing customer due diligence. This ongoing customer due diligence element for AML programs includes: (1) Understanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile; and (2) conducting ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Bank Secrecy Act
• The establishment and implementation of policies, procedures and internal controls reasonably designed to achieve compliance with the applicable provisions of the BSA and implementing regulations;
• independent testing for compliance by broker-dealer personnel or a qualified outside party;
• designation of an individual or individuals responsible for implementing and monitoring the operations and internal controls of the AML program; and
• ongoing training for appropriate persons.
In addition to meeting the BSA's requirement with respect to AML programs, Exchange Members must also comply with Options 9, Section 21, which incorporates the BSA's four pillars, as well as requires Members' AML programs to establish and implement policies and procedures that can be reasonably expected to detect and cause the reporting of suspicious transactions.
On May 11, 2016, FinCEN, the bureau of the Department of the Treasury responsible for administering the BSA and its implementing regulations, issued the CDD Rule
Specifically, the CDD Rule focuses particularly on the second component by adding a new requirement that covered financial institutions identify and verify the identity of the beneficial owners of all legal entity customers at the time a new account is opened, subject to certain exclusions and exemptions.
On November 21, 2017, FINRA published Regulatory Notice 17-40 to provide guidance to member firms regarding their obligations under FINRA Rule 3310 in light of the adoption of FinCEN's CDD Rule. In addition, the Notice summarized the CDD Rule's impact on member firms, including the addition of the new fifth pillar required for member firms' AML programs. FINRA also amended FINRA Rule 3310 to explicitly incorporate the fifth pillar.
Section 352 of the USA PATRIOT Act of 2001
FinCEN's CDD Rule does not change the requirements of Options 9, Section 21, and Members must continue to comply with its requirements.
As stated in the CDD Rule, these provisions are not new and merely codify existing expectations for Members to adequately identify and report suspicious transactions as required under the BSA and encapsulate practices generally already undertaken by securities firms to know and understand their customers.
FinCEN states in the CDD Rule that firms must necessarily have an understanding of the nature and purpose of the customer relationship in order to determine whether a transaction is potentially suspicious and, in turn, to fulfill their SAR obligations.
The CDD Rule also addresses the interplay of understanding the nature and purpose of customer relationships with the ongoing monitoring obligation discussed below. The CDD Rule explains that firms are not necessarily required or expected to integrate customer information or the customer risk profile into existing transaction monitoring systems (for example, to serve as the baseline for identifying and assessing suspicious transactions on a contemporaneous basis).
As with the requirement to understand the nature and purpose of the customer relationship, the requirement to conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information, merely adopts existing supervisory and regulatory expectations as explicit minimum standards of customer due diligence required for firms' AML programs.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change simply incorporates into Options 9, Section 21 the ongoing customer due diligence element, or “fifth pillar,” required for AML programs by the CDD Rule. Regardless of the proposed rule change, to the extent that the elements of the fifth pillar are not already included in Members' AML programs, the CDD Rule requires Members to update their AML programs to explicitly incorporate them. In addition, as stated in the CDD Rule, these elements are already implicitly required for covered financial institutions to comply with their suspicious activity reporting requirements. Further, all Exchange Members that have customers are required to be members of FINRA pursuant to Rule 15b9-1 under the Exchange Act,
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend Options 9, Section 21, “Anti-Money Laundering Compliance Program.” This rule change is intended to reflect the Financial Crimes Enforcement Network's (“FinCEN”) adoption of a final rule on Customer Due Diligence Requirements for Financial Institutions (“CDD Rule”). Specifically, the proposed amendments would conform Options 9, Section 21 to the CDD Rule's amendments to the minimum regulatory requirements for Members' anti-money laundering (“AML”) compliance programs by requiring such programs to include risk-based procedures for conducting ongoing customer due diligence. This ongoing customer due diligence element for AML programs includes: (1) Understanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile; and (2) conducting ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.
The Exchange has designated this proposal as “non-controversial” under paragraph (f)(6) of Rule 19b-4
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Bank Secrecy Act
• The establishment and implementation of policies, procedures and internal controls reasonably designed to achieve compliance with the applicable provisions of the BSA and implementing regulations;
• independent testing for compliance by broker-dealer personnel or a qualified outside party;
• designation of an individual or individuals responsible for implementing and monitoring the operations and internal controls of the AML program; and
• ongoing training for appropriate persons.
On May 11, 2016, FinCEN, the bureau of the Department of the Treasury responsible for administering the BSA and its implementing regulations, issued the CDD Rule
Specifically, the CDD Rule focuses particularly on the second component by adding a new requirement that covered financial institutions identify and verify the identity of the beneficial owners of all legal entity customers at the time a new account is opened, subject to certain exclusions and exemptions.
On November 21, 2017, FINRA published Regulatory Notice 17-40 to provide guidance to member firms regarding their obligations under FINRA Rule 3310 in light of the adoption of FinCEN's CDD Rule. In addition, the Notice summarized the CDD Rule's impact on member firms, including the addition of the new fifth pillar required for member firms' AML programs. FINRA also amended FINRA Rule 3310 to explicitly incorporate the fifth pillar.
Section 352 of the USA PATRIOT Act of 2001
FinCEN's CDD Rule does not change the requirements of Options 9, Section 21, and Members must continue to comply with its requirements.
As stated in the CDD Rule, these provisions are not new and merely codify existing expectations for Members to adequately identify and report suspicious transactions as required under the BSA and encapsulate practices generally already undertaken by securities firms to know and understand their customers.
FinCEN states in the CDD Rule that firms must necessarily have an understanding of the nature and purpose of the customer relationship in order to determine whether a transaction is potentially suspicious and, in turn, to fulfill their SAR obligations.
The CDD Rule also addresses the interplay of understanding the nature and purpose of customer relationships with the ongoing monitoring obligation discussed below. The CDD Rule explains that firms are not necessarily required or expected to integrate customer information or the customer risk profile into existing transaction monitoring systems (for example, to serve as the baseline for identifying and assessing suspicious transactions on a contemporaneous basis).
As with the requirement to understand the nature and purpose of the customer relationship, the requirement to conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information, merely adopts existing supervisory and regulatory expectations as explicit minimum standards of customer due diligence required for firms' AML programs.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change simply incorporates into Options 9, Section 21 the ongoing customer due diligence element, or “fifth pillar,” required for AML programs by the CDD Rule. Regardless of the proposed rule change, to the extent that the elements of the fifth pillar are not already included in Members' AML programs, the CDD Rule requires Members to update their AML programs to explicitly incorporate them. In addition, as stated in the CDD Rule, these elements are already implicitly required for covered financial institutions to comply with their suspicious activity reporting requirements. Further, all Exchange Members that have customers are required to be members of FINRA pursuant to Rule 15b9-1 under the Exchange Act,
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),
The Exchange proposes to amend Options 9, Section 21, “Anti-Money Laundering Compliance Program.” This rule change is intended to reflect the Financial Crimes Enforcement Network's (“FinCEN”) adoption of a final rule on Customer Due Diligence Requirements for Financial Institutions (“CDD Rule”). Specifically, the proposed amendments would conform Options 9, Section 21 to the CDD Rule's amendments to the minimum regulatory requirements for Members' anti-money laundering (“AML”) compliance programs by requiring such programs to include risk-based procedures for conducting ongoing customer due diligence. This ongoing customer due diligence element for AML programs includes: (1) Understanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile; and (2) conducting ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information.
The Exchange has designated this proposal as “non-controversial” under paragraph (f)(6) of Rule 19b-4
The text of the proposed rule change is available on the Exchange's website at
In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements.
The Bank Secrecy Act
• The establishment and implementation of policies, procedures and internal controls reasonably designed to achieve compliance with the applicable provisions of the BSA and implementing regulations;
• independent testing for compliance by broker-dealer personnel or a qualified outside party;
• designation of an individual or individuals responsible for implementing and monitoring the operations and internal controls of the AML program; and
• ongoing training for appropriate persons.
In addition to meeting the BSA's requirement with respect to AML programs, Exchange Members must also comply with Options 9, Section 21, which incorporates the BSA's four pillars, as well as requires Members' AML programs to establish and implement policies and procedures that can be reasonably expected to detect and cause the reporting of suspicious transactions.
On May 11, 2016, FinCEN, the bureau of the Department of the Treasury responsible for administering the BSA and its implementing regulations, issued the CDD Rule
Specifically, the CDD Rule focuses particularly on the second component by adding a new requirement that covered financial institutions identify and verify the identity of the beneficial owners of all legal entity customers at the time a new account is opened, subject to certain exclusions and exemptions.
On November 21, 2017, FINRA published Regulatory Notice 17-40 to provide guidance to member firms regarding their obligations under FINRA Rule 3310 in light of the adoption of FinCEN's CDD Rule. In addition, the Notice summarized the CDD Rule's impact on member firms, including the addition of the new fifth pillar required for member firms' AML programs. FINRA also amended FINRA Rule 3310 to explicitly incorporate the fifth pillar.
Section 352 of the USA PATRIOT Act of 2001
FinCEN's CDD Rule does not change the requirements of Options 9, Section 21, and Members must continue to comply with its requirements.
As stated in the CDD Rule, these provisions are not new and merely codify existing expectations for Members to adequately identify and report suspicious transactions as required under the BSA and encapsulate practices generally already undertaken by securities firms to know and understand their customers.
FinCEN states in the CDD Rule that firms must necessarily have an understanding of the nature and purpose of the customer relationship in order to determine whether a transaction is potentially suspicious and, in turn, to fulfill their SAR obligations.
The CDD Rule also addresses the interplay of understanding the nature and purpose of customer relationships with the ongoing monitoring obligation discussed below. The CDD Rule explains that firms are not necessarily required or expected to integrate customer information or the customer risk profile into existing transaction monitoring systems (for example, to serve as the baseline for identifying and assessing suspicious transactions on a contemporaneous basis).
As with the requirement to understand the nature and purpose of the customer relationship, the requirement to conduct ongoing monitoring to identify and report suspicious transactions and, on a risk basis, to maintain and update customer information, merely adopts existing supervisory and regulatory expectations as explicit minimum standards of customer due diligence required for firms' AML programs.
The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Act,
The Exchange does not believe that the proposed rule change will impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change simply incorporates into Options 9, Section 21 the ongoing customer due diligence element, or “fifth pillar,” required for AML programs by the CDD Rule. Regardless of the proposed rule change, to the extent that the elements of the fifth pillar are not already included in Members' AML programs, the CDD Rule requires Members to update their AML programs to explicitly incorporate them. In addition, as stated in the CDD Rule, these elements are already implicitly required for covered financial institutions to comply with their suspicious activity reporting requirements. Further, all Exchange Members that have customers are required to be members of FINRA pursuant to Rule 15b9-1 under the Exchange Act,
No written comments were either solicited or received.
Because the foregoing proposed rule change does not: (i) Significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate, it has become effective pursuant to Section 19(b)(3)(A)(iii) of the Act
At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings to determine whether the proposed rule should be approved or disapproved.
Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods:
• Use the Commission's internet comment form (
• Send an email to
• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.
Notice is hereby given of the following determinations: I hereby determine that certain objects included in the exhibition “Caravans of Gold, Fragments in Time: Art, Culture, and Exchange across Medieval Saharan Africa,” being re-imported from abroad for temporary exhibition within the United States, are of cultural significance. The objects are re-imported pursuant to loan agreements with the foreign owners or custodians. I also determine that the exhibition or display of the exhibit objects at the National Museum of African Art, Smithsonian Institution, Washington, District of
Chi D. Tran, Program Administrator, Office of the Legal Adviser, U.S. Department of State (telephone: 202-632-6471; email:
The foregoing determinations were made pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
Department of State.
Notice.
The Department of State (the Department) is publishing this notice pursuant to Executive Order 13891 to announce and describe the public-facing portal that will contain the Department's Guidance Documents, as described under the Executive Order.
The Guidance Portal is available as of February 28, 2020.
If a member of the public wishes to provide a comment on any Guidance Document included on the portal, or suggestions for operation of the site, he or she can submit the comment to
Alice Kottmyer, Attorney-Adviser, Office of the Legal Adviser, 202-647-2318,
Pursuant to Section 3 of Executive Order 13891,
Pursuant to Sections 2 and 7 of the Executive Order, certain documents are not linked to or included on the Department's Guidance Portal. Such documents include, but are not limited to, those that pertain to “foreign or military affairs, or to a national security or homeland security function of the United States (other than guidance documents involving procurement or the import or export of non-defense articles and services)”; including but not limited to documents related to the implementation of the Arms Export Control Act, 22 U.S.C. 2751
If those documents are included on other Department websites, exclusion from the Guidance Portal will not affect the availability of those documents on such websites. For clarity and convenience, the Department may include on the Guidance Portal documents that fall outside the scope of the Executive Order, including documents that are not “Guidance Documents” and documents that are otherwise exempted under the Executive Order. The Department may remove any or all such documents from the Guidance Portal at any time.
On November 15, 2019, notice was published on page 62561 of the
Chi D. Tran, Program Administrator, Office of the Legal Adviser, U.S. Department of State (telephone: 202-632-6471; email:
The foregoing determinations were made pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681,
Indiana & Ohio Railway Company (IORY) has filed a verified notice of exemption under 49 CFR part 1152 subpart F—
IORY has certified that: (1) No local traffic has moved over the Line for at least two years; (2) because the Line is stub-ended, it has not handled any overhead traffic in at least two years, and there is no potential overhead traffic that would need to be rerouted; (3) no formal complaint filed by a user of rail service on the Line (or by a state or local government entity acting on behalf of such user) regarding cessation of service over the Line is pending either with the Surface Transportation Board (Board) or with any U.S. District Court or has been decided in favor of complainant within the two-year period; and (4) the requirements at 49 CFR 1105.12 (newspaper publication) and 49 CFR 1152.50(d)(1) (notice to governmental agencies) have been met.
As a condition to this exemption, any employee adversely affected by the discontinuance of service shall be protected under
Provided no formal expression of intent to file an offer of financial assistance (OFA)
A copy of any petition filed with Board should be sent to IORY's representative, Justin J. Marks, Clark Hill PLC, 1001 Pennsylvania Ave. NW, Suite 1300 South, Washington, DC 20004.
If the verified notice contains false or misleading information, the exemption is void ab initio.
Board decisions and notices are available at
By the Board, Allison C. Davis, Director, Office of Proceedings.
Federal Aviation Administration (FAA), Department of Transportation.
Notice of modification of Airport Improvement Program grant assurances; opportunity to comment.
The FAA has updated the AIP grant assurances to reflect recent legislative provisions in the FAA Reauthorization Act of 2018 as well as recently issued executive orders.
The FAA is implementing these modified grant assurances upon publication of this notice to expedite processing Fiscal Year 2020 grants under the AIP. The FAA will accept public comments concerning these modified grant assurances for 30 days. Comments must be submitted on or before March 30, 2020. If necessary, in response to comments received, the FAA will consider appropriate revisions to these grant assurance modifications through publication of a subsequent notice in the
You may send comments [identified by Docket Number FAA-2020-0137] using any of the following methods:
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Dave Cushing, Manager, Airports Financial Assistance Division, Federal Aviation Administration, 800 Independence Avenue SW, Washington, DC 20591, telephone (202) 267-8827; fax: (202) 267-5302.
This notice is published under the authority described in Subtitle VII, Part B, Chapter 471, Sections 47107 and 47122 of Title 49 United States Code (U.S.C.). In addition, the statutory authorities delegated to the Federal Aviation Administration are enumerated in Title 49 Code of Federal Regulations (CFR) § 1.83 (“Delegations to the Federal Aviation Administration”).
A sponsor (applicant) seeking financial assistance in the form of an AIP grant for airport planning, airport development, noise compatibility planning, or noise mitigation under 49 U.S.C., as amended, must agree to comply with certain assurances. These grant assurances are incorporated in, and become part of a sponsor's grant agreement for Federal assistance. As need dictates, the FAA modifies these assurances to reflect new Federal requirements. Notice of such modifications is published in the
There are three types of AIP grant assurances:
• Airport Sponsor (applicable for airport development);
• Non-Airport Sponsors Undertaking Noise Compatibility Program Projects; and
• Planning Agency Sponsors.
Prior to the FAA Reauthorization Act of 2018 (Pub. L. 115-254), the assurances were published on:
• February 3, 1988, at 53 FR 3104 and amended on September 6, 1988, at 53 FR 34361;
• August 29, 1989, at 54 FR 35748;
• June 10, 1994, at 59 FR 30076;
• January 4, 1995, at 60 FR 521;
• June 2, 1997, at 62 FR 29761;
• August 18, 1999, at 64 FR 45008;
• March 29, 2005, at 70 FR 15980;
• March 18, 2011, at 76 FR 15028;
• April 13, 2012, at 72 FR 22376; and
• April 3, 2014, at 79 FR 18755.
A complete list of the current grant assurances may be viewed at:
The FAA is making several changes to the AIP grant assurances. These changes will be in effect for grants issued on or after the date of publication of this notice. The changes to the AIP grant assurances are listed below. The grant assurance numbers referenced relate to the assurance (airport development grants):
Because these have no change on the substance of the assurances, these changes, including minor edits to Grant Assurance 37, have not been specifically called out.
The FAA has added Executive Order 13788 (“Buy American and Hire American”) and Executive Order 13858 (“Strengthening Buy-American Preferences for Infrastructure Projects”) to the list of executive orders applicable in Grant Assurance C.
Section 131 of the Act requires the FAA to change Sponsor Assurance #32 (“Engineering and Design Services”). Sponsor Assurance #32 now applies to a sponsor if “any phase of such project has received funds under this subchapter.”
Section 135 of the Act expands the statutory grant assurance regarding veteran's preference to include veterans of “Operation New Dawn, Operation Inherent Resolve, Operation Freedom's Sentinel, or any successor contingency operation to such operations;” and small business concerns owned and controlled by disabled veterans. FAA has revised Sponsor Assurance #15, Veteran's Preference, to include these changes.
Section 163 of the Act modified the FAA's authorities and responsibilities regarding changes in airport land use under certain circumstances. Sponsor Assurances #5(b) and #29 have been amended to reflect this provision.
In consideration of the above, the FAA makes the following changes to the existing published Airport Sponsor Assurances.
C. Sponsor Certification. The sponsor hereby assures and certifies that it will comply with all applicable Federal laws, regulations, executive orders, policies, guidelines, and requirements as they relate to the application, acceptance and use of Federal funds for this project including but not limited to the following updated provisions.
g. Executive Order 13788—Buy American and Hire American.
5. Preserving Rights and Powers.
b. Subject to the FAA Act of 2018, Public Law 115-254, Section 163, it will not sell, lease, encumber, or otherwise transfer or dispose of any part of its title or other interests in the property shown on Exhibit A to this application or, for a noise compatibility program project, that portion of the property upon which Federal funds have been expended, for the duration of the terms, conditions, and assurances in this grant agreement without approval by the Secretary. If the transferee is found by the Secretary to be eligible under Title 49, United States Code, to assume the obligations of this grant agreement and to have the power, authority, and financial resources to carry out all such obligations, the sponsor shall insert in the contract or document transferring or disposing of the sponsor's interest, and make binding upon the transferee all of the terms, conditions, and assurances contained in this grant agreement.
29. Airport Layout Plan.
a. Subject to the FAA Reauthorization Act of 2018, Public Law 115-254, Section 163, it will keep up to date at all times an airport layout plan of the airport showing:
(1) Boundaries of the airport and all proposed additions thereto, together with the boundaries of all offsite areas owned or controlled by the sponsor for airport purposes and proposed additions thereto;
(2) the location and nature of all existing and proposed airport facilities and structures (such as runways, taxiways, aprons, terminal buildings, hangars and roads), including all proposed extensions and reductions of existing airport facilities;
(3) the location of all existing and proposed non-aviation areas and of all existing improvements thereon; and
(4) all proposed and existing access points used to taxi aircraft across the airport's property boundary. Such airport layout plans and each amendment, revision, or modification thereof, shall be subject to the approval of the Secretary which approval shall be evidenced by the signature of a duly authorized representative of the Secretary on the face of the airport layout plan. The sponsor will not make or permit any changes or alterations in the airport or any of its facilities which are not in conformity with the airport layout plan as approved by the Secretary and which might, in the opinion of the Secretary, adversely affect the safety, utility, or efficiency of the airport.
b. Subject to the FAA Reauthorization Act of 2018, Public Law 115-254, Section 163, if a change or alteration in the airport or the facilities is made which the Secretary determines adversely affects the safety, utility, or efficiency of any federally owned, leased, or funded property on or off the airport and which is not in conformity with the airport layout plan as approved by the Secretary, the owner or operator will, if requested, by the Secretary (1) eliminate such adverse effect in a manner approved by the Secretary; or (2) bear all costs of relocating such property (or replacement thereof) to a site acceptable to the Secretary and all costs of restoring such property (or replacement thereof) to the level of safety, utility, efficiency, and cost of operation existing before the unapproved change in the airport or its facilities except in the case of a relocation or replacement of an existing airport facility due to a change in the
32. Engineering and Design Services. If any phase of such project has received Federal funds under Chapter 471 subchapter 1 of Title 49 U.S.C., it will award each contract, or sub-contract for program management, construction management, planning studies, feasibility studies, architectural services, preliminary engineering, design, engineering, surveying, mapping or related services in the same manner as a contract for architectural and engineering services is negotiated under Chapter 11 of Title 40 U.S.C., or an equivalent qualifications-based requirement prescribed for or by the sponsor of the airport.
As noted previously, all other grant assurances remain in full force and effect except as shown above.
Federal Motor Carrier Safety Administration (FMCSA), DOT.
Notice and request for comments.
In accordance with the Paperwork Reduction Act of 1995, FMCSA announces its plan to submit the Information Collection Request (ICR) described below to the Office of Management and Budget (OMB) for review and approval. This request, titled “Crime Prevention for Truckers,” will allow for a study to understand the prevalence, seriousness, and nature of the problem of harassment and assaults against minority and female truckers.
Please send your comments by March 30, 2020. OMB must receive your comments by this date in order to act quickly on the ICR.
All comments should reference Federal Docket Management System (FDMS) Docket Number FMCSA-2018-0278. Interested persons are invited to submit written comments on the proposed information collection to the Office of Information and Regulatory Affairs, Office of Management and Budget. Comments should be addressed to the attention of the Desk Officer, Department of Transportation/Federal Motor Carrier Safety Administration, and sent via electronic mail to
Chris Flanigan, General Engineer, Technology Division, Department of Transportation, Federal Motor Carrier Safety Administration, 6th Floor, West Building, 1200 New Jersey Avenue SE, Washington, DC 20590-0001. Telephone: 202-385-2384; Email Address:
The purpose of this research study is to gather information to answer these questions, to understand how serious the problem is, and to report it to FMCSA so the Agency can decide on further options for evaluation and action. FMCSA needs to explore and validate the problem of harassment- and assault-related crimes, especially against female and minority male truckers for two reasons. First, there seems to be a perception among these subpopulations of truckers that they are more vulnerable than others. Second, there is a critical shortage of truckers, and helping these subpopulations of truckers protect themselves from crimes could draw more truckers from these subpopulations, while stemming turnover, to alleviate the shortage.
FMCSA has contracted with Battelle to create and execute a survey of truck drivers to gather this information. This exploratory survey will be limited in scale and scope. Quantitative and qualitative analysis of the data will help the Agency to understand the nature and extent of the problem and begin to formulate an approach to reducing it. The results will not be used for rulemaking.
The survey of professional truck drivers will be limited to female and minority male drivers. The survey will ask whether the drivers have experienced race- or gender-related harassment or crimes on the job. If the driver has had such an experience, the survey will ask follow-up questions on where and when the incidents occurred, any information the respondent knows about the perpetrator, and whether the respondent reported the incident. The survey will be anonymous. None of the questions ask for information that could personally identify the respondent or any perpetrators involved. Some respondents will take the survey online, and others will take it in the form of an in-person interview. Identical questions
A maximum of 440 males and 440 females will be included in the information collection. The information will be collected through a combination of an online survey and in-person interviews. Approximately 160 in person interviews will be completed, 80 females and 80 minority males. The balance will take the survey electronically. Some individuals may be eligible to participate in the survey but will not have had any recent experience of harassment or assault. These individuals will be included in the final results for calculation of prevalence. The total number of respondents targeted for those who experienced some sort of harassment or assault will be 400 in each group. If 400 targeted individuals are reached before the overall cap of 440 respondents, data collection will be stopped for that group. Individuals who are screened but are not female or minority male, or with other criteria such as not being active drivers, will not be included in the interview counts, though a tabulation of the number of such contacts and reason for their disqualification will be reported to better understand resource needs and burden in future data collection efforts of this type. A $25 incentive will be given to eligible respondents to the in-person interview or the online survey. For respondents to be eligible and to receive the incentive, they must report that they are a female or a minority male who has driven a truck professionally in the past 2 years and complete the survey—at least through the initial questions of what events, if any, they have experienced.
Battelle statisticians experienced in surveys and in analyzing data for FMCSA will execute the data analysis plan. Findings will be presented in a report that will be made available on the Agency's website so that interested stakeholders and the general public will be aware of the findings. Battelle is required to deliver a public-use dataset at the conclusion of the project. By understanding the nature and prevalence of crimes against truckers, FMCSA will be able to formulate and promote programs to address the problem. The report may be useful to law enforcement personnel, motor carriers, truck drivers, operators of private truck stops, and others interested in addressing the situation.
If study findings indicate a significant problem that merits action, FMCSA may consider developing training or outreach materials to help truckers protect themselves from crime or harassment. Such training or outreach materials could help foster motor carriers' employee retention efforts and help make the truck driving profession more attractive to a greater range of people.
Public comments on this were requested in the
Ellen Voie, President, Women In Trucking (WIT) Association, appreciates the initiative to better understand the challenges female and minority drivers face. WIT conducted research on best practices in hiring and retaining female professional drivers. The respondents indicated their level of safety at 4.4 on a scale of one to ten. She states that this is unacceptable and that once the survey has been completed and we can better understand the extent of crimes against female (and minority) drivers, we can better address how to eliminate any harassment and assaults directed against them. Overall, this information will assist WIT in their efforts to attract and retain more women in trucking.
Desiree Wood, President, Real Women in Trucking, Inc. (RWIT), has been receiving distress calls related to sexual misconduct related to entry-level driver training fleets for over 10 years. RWIT is a truck driver organization formed by working female truck drivers, many of whom have had firsthand experience with sexual misconduct at a trucking company, including Ms. Wood. This led to her forming RWIT, which aims to assist women who have been raped, assaulted, harassed, and abandoned by their employing carrier by referring them to law firms and the EEOC. Ms. Wood recommends that FMCSA take immediate action to address these issues instead of conducting the survey.
Bunny Sterling, East Calais, Vermont, described several types of harassment against women working in the trucking industry, but did not claim specifically that they happened to her. They included lude comments and gestures, unwanted physical advances and phone calls, and threats of losing employment if retaliation occurred.
FMCSA appreciates the comments and support for examining this issue and plans to proceed with the data call to assess in more detail the extent of this problem. This could lead to the agency reaching out to driver training schools to encourage that they address these issues in their courses.
Public Comments Invited: You are asked to comment on any aspect of this information collection, including: (1) Whether the proposed collection is necessary for the FMCSA to perform its functions; (2) the accuracy of the estimated burden; (3) ways for the FMCSA to enhance the quality, usefulness, and clarity of the collected information; and (4) ways that the burden could be minimized without reducing the quality of the collected information.
Under part 211 of title 49 Code of Federal Regulations (CFR), this document provides the public notice that on January 30, 2020, Nevada Northern Railway (NN) petitioned the Federal Railroad Administration (FRA) for a waiver of compliance from certain provisions of the Federal railroad safety regulations contained at 49 CFR part 230, Steam Locomotive Inspection and Maintenance Standards. FRA assigned the petition Docket Number FRA-2020-0018.
Specifically, NN requests relief from 49 CFR 230.17,
NN is a historical railroad that offers passenger train rides. It is supported by the Nevada Northern Railway Foundation. NN is concerned that if Locomotive 40 must be taken out of service, NN will be left with only one operating steam locomotive for its 2020 season. If that steam engine also cannot run, it will be impossible for NN to operate its schedule of steam-powered excursion trips, which would cause an excessive financial strain on the organization, as locomotive rides are
A copy of the petition, as well as any written communications concerning the petition, is available for review online at
Interested parties are invited to participate in these proceedings by submitting written views, data, or comments. FRA does not anticipate scheduling a public hearing in connection with these proceedings since the facts do not appear to warrant a hearing. If any interested parties desire an opportunity for oral comment and a public hearing, they should notify FRA, in writing, before the end of the comment period and specify the basis for their request.
All communications concerning these proceedings should identify the appropriate docket number and may be submitted by any of the following methods:
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Communications received by April 13, 2020 will be considered by FRA before final action is taken. Comments received after that date will be considered if practicable. Anyone can search the electronic form of any written communications and comments received into any of our dockets by the name of the individual submitting the comment (or signing the document, if submitted on behalf of an association, business, labor union, etc.). Under 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its processes. DOT posts these comments, without edit, including any personal information the commenter provides, to
Issued in Washington, DC.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirements of the coastwise trade laws to allow the carriage of no more than twelve passengers for hire on vessels, which are three years old or more. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before March 30, 2020.
You may submit comments identified by DOT Docket Number MARAD-2020-0045 by any one of the following methods:
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If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Bianca Carr, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-453, Washington, DC 20590. Telephone 202-366-9309, Email
As described by the applicant the intended service of the vessel EPIPHANY is:
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Department of Transportation, Maritime Administration, Office of Legislation and Regulations, MAR-225, W24-220, 1200 New Jersey Avenue SE, Washington, DC 20590. Include a cover letter setting forth with specificity the basis for any such claim and, if possible, a summary of your submission that can be made available to the public.
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, to
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice and request for comments.
The Maritime Administration (MARAD) is performing its annual update of registered U.S.-flag launch barges. Any additions or changes to the current
Submit comments on or before March 30, 2020.
You may submit comments identified by DOT Docket Number MARAD-2020-0026 by any of the following methods:
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•
All submissions must include the agency name and docket number for this notice. All comments received will be posted without change to
Bianca Carr, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-453, Washington, DC 20590. Telephone 202-366-9309, Email
Pursuant to 46 CFR part 389.3, in order to provide timely notification and to identify potential participants to each other so they may examine how they can best work together to maximize use of coastwise-qualified vessels, MARAD is required to publish a notice in the
In accordance with 5 U.S.C. 553(c), DOT/MARAD solicits comments from the public to better inform its rulemaking process. DOT/MARAD posts these comments, without edit, to
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirements of the coastwise trade laws to allow the carriage of no more than twelve passengers for hire on vessels, which are three years old or more. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before March 30, 2020.
You may submit comments identified by DOT Docket Number MARAD-2020-0042 by any one of the following methods:
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•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Bianca Carr, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-453, Washington, DC 20590. Telephone 202-366-9309, Email
As described by the applicant the intended service of the vessel WATER LILLY is:
The complete application is available for review identified in the DOT docket as MARAD-2020-0042 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Department of Transportation, Maritime Administration, Office of Legislation and Regulations, MAR-225, W24-220, 1200 New Jersey Avenue SE, Washington, DC 20590. Include a cover letter setting forth with specificity the basis for any such claim and, if possible, a summary of your submission that can be made available to the public.
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, to
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirements of the coastwise trade laws to allow the carriage of no more than twelve passengers for hire on vessels, which are three years old or more. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before March 30, 2020.
You may submit comments identified by DOT Docket Number MARAD-2020-0044 by any one of the following methods:
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•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Bianca Carr, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-453, Washington, DC 20590. Telephone 202-366-9309, Email
As described by the applicant the intended service of the vessel ALEMANDE is:
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Department of Transportation, Maritime Administration, Office of Legislation and Regulations, MAR-225, W24-220, 1200 New Jersey Avenue SE, Washington, DC 20590. Include a cover letter setting forth with specificity the basis for any such claim and, if possible, a summary of your submission that can be made available to the public.
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, to
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirements of the coastwise trade laws to allow the carriage of no more than twelve passengers for hire on vessels, which are three years old or more. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before March 30, 2020.
You may submit comments identified by DOT Docket Number MARAD-2020-0041 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Bianca Carr, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-453, Washington, DC 20590. Telephone 202-366-9309, Email
As described by the applicant the intended service of the vessel KISKEEDEE is:
The complete application is available for review identified in the DOT docket as MARAD-2020-0041 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Department of Transportation, Maritime Administration, Office of Legislation and Regulations, MAR-225, W24-220, 1200 New Jersey Avenue SE, Washington, DC 20590. Include a cover letter setting forth with specificity the basis for any such claim and, if possible, a summary of your submission that can be made available to the public.
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, to
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirements of the coastwise trade laws to allow the carriage of no more than twelve passengers for hire on vessels, which are three years old or more. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before March 30, 2020.
You may submit comments identified by DOT Docket Number MARAD-2020-0043 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Bianca Carr, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-453,
As described by the applicant the intended service of the vessel JUNO is:
The complete application is available for review identified in the DOT docket as MARAD-2020-0043 at
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Department of Transportation, Maritime Administration, Office of Legislation and Regulations, MAR-225, W24-220, 1200 New Jersey Avenue SE, Washington, DC 20590. Include a cover letter setting forth with specificity the basis for any such claim and, if possible, a summary of your submission that can be made available to the public.
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, to
By Order of the Maritime Administrator.
Maritime Administration, DOT.
Notice.
The Secretary of Transportation, as represented by the Maritime Administration (MARAD), is authorized to grant waivers of the U.S.-build requirements of the coastwise trade laws to allow the carriage of no more than twelve passengers for hire on vessels, which are three years old or more. A request for such a waiver has been received by MARAD. The vessel, and a brief description of the proposed service, is listed below.
Submit comments on or before March 30, 2020.
You may submit comments identified by DOT Docket Number MARAD-2020-0040 by any one of the following methods:
•
•
If you mail or hand-deliver your comments, we recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.
Bianca Carr, U.S. Department of Transportation, Maritime Administration, 1200 New Jersey Avenue SE, Room W23-453, Washington, DC 20590. Telephone 202-366-9309, Email
As described by the applicant the intended service of the vessel DOCKTALES is:
The complete application is available for review identified in the DOT docket
Please submit your comments, including the attachments, following the instructions provided under the above heading entitled
Go to the docket online at
Yes. Be aware that your entire comment, including your personal identifying information, will be made publicly available.
If you wish to submit comments under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Department of Transportation, Maritime Administration, Office of Legislation and Regulations, MAR-225, W24-220, 1200 New Jersey Avenue SE, Washington, DC 20590. Include a cover letter setting forth with specificity the basis for any such claim and, if possible, a summary of your submission that can be made available to the public.
In accordance with 5 U.S.C. 553(c), DOT solicits comments from the public to better inform its rulemaking process. DOT posts these comments, without edit, to
By Order of the Maritime Administrator.
National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).
Receipt of petition.
FCA US, LLC, (f/k/a Chrysler Group, LLC) “FCA US,” has determined that certain Mopar headlamp assemblies sold as aftermarket equipment and installed as original equipment in certain model year (MY) 2017-2018 Dodge Journey motor vehicles do not fully comply with Federal Motor Vehicle Safety Standard (FMVSS) No. 108,
The closing date for comments on the petition is February 28, 2020.
Interested persons are invited to submit written data, views, and arguments on this petition. Comments must refer to the docket number cited in the title of this notice and may be submitted by any of the following methods:
•
•
•
• Comments may also be faxed to (202) 493-2251.
Comments must be written in the English language, and be no greater than 15 pages in length, although there is no limit to the length of necessary attachments to the comments. If comments are submitted in hard copy form, please ensure that two copies are provided. If you wish to receive confirmation that comments you have submitted by mail were received, please enclose a stamped, self-addressed postcard with the comments. Note that all comments received will be posted without change to
All comments and supporting materials received before the close of business on the closing date indicated above will be filed in the docket and will be considered. All comments and supporting materials received after the closing date will also be filed and will be considered to the fullest extent possible.
When the petition is granted or denied, notice of the decision will also be published in the
All comments, background documentation, and supporting materials submitted to the docket may be viewed by anyone at the address and times given above. The documents may also be viewed on the internet at
DOT's complete Privacy Act Statement is available for review in a
I.
This notice of receipt, of FCA US's petition, is published under 49 U.S.C. 30118 and 30120 and does not represent any agency decision or other exercises of judgment concerning the merits of the petition.
II.
III.
IV.
V.
The following views and arguments presented in this section, V. Summary of FCA US's petition, are the views and arguments provided by FCA US. They have not been evaluated by the Agency and do not reflect the views of the Agency.
FCA US described the subject noncompliance and stated that the noncompliance is inconsequential as it relates to motor vehicle safety. FCA US submitted the following views and arguments in support of the petition:
A. For the purposes of FMVSS No. 108, the primary function of a reflex reflector is to prevent crashes by permitting early detection of an unlighted motor vehicle at an intersection or when parked on or by the side of the road. Because reflex reflectors are not independent light sources, their performance is wholly reliant upon the amount of illumination they receive from vehicle headlamps. Ideally, a reflex reflector would achieve its highest performance when the reflex reflector is mounted at the height of another vehicle's lower beam `hot spot.' Due to the significant range of permissible mounting heights for headlamps (between 22 and 54 inches), achieving such ideal performance is impractical. FMVSS No. 108, which establishes minimum performance standards for reflex reflectors, specifies a range of acceptable reflector mounting heights (not less than 15 inches or more than 60 inches) to ensure that reflex reflectors are exposed to enough illumination to be effective. The standard also provides allowances in the fore and aft location of reflex reflectors (
B. For reasons discussed below, and supported by a demonstration project conducted by FCA US, FCA US submits that the reflex reflectors on the subject vehicles perform adequately to meet the safety purpose of the standard because they permit the early detection of an unlighted motor vehicle at an intersection or when parked, notwithstanding their deviation from certain photometric requirements.
1. FCA US believes that the failure of these reflex reflectors to meet the photometric requirements does not reduce their effectiveness in providing the necessary visibility for oncoming vehicles and that the difference between the reflectivity provided by a compliant reflector is not distinguishable from the reflectivity provided by a noncompliant reflector. To demonstrate this point, FCA US conducted an informal evaluation comparing the performance of a Dodge Journey equipped with a known compliant reflex reflector with a Dodge Journey equipped with a known noncompliant reflex reflector. This evaluation was conducted with two Dodge Journey vehicles parked front end to front end across the road surface, 100 feet (30.5 meters) away from vehicles that used their headlamps as a source of illumination for observers to evaluate the luminous intensity of each front side reflex reflector. The 100 feet (30.5 meters) distance was chosen because that is the distance specified in FMVSS No. 108 and CMVSS No. 108 for testing reflex reflectors using a goniometer in a photometric laboratory.
2. A 2019 Jeep Cherokee with LED projector headlamps and a 2019 Ram 1500 Pickup Truck with LED reflector headlamps were used as sources of illumination. Sixteen volunteer evaluators (who were FCA US or FCA Canada, Inc., employees) stood immediately in front of, and at the centerline of, the vehicles whose headlamps were being used as the source of illumination. Evaluators were asked if they were able to distinguish a difference between the compliant and noncompliant reflex reflectors. None of the evaluators were able to distinguish any luminous intensity differences of the light being reflected in any of the scenarios.
3. The reflex reflectors in the subject vehicles were mounted 32.31 to 32.62 inches from the ground to the center of the devices. The headlamp mounting heights of the two vehicles used as sources of illumination in the
This evaluation was conducted with two Dodge Journey vehicles parked front end to front end across the road surface, 100 feet (30.5 meters) away from vehicles that used their headlamps as a source of illumination for observers to evaluate the luminous intensity of each front side reflex reflector. The 100 feet (30.5 meters) distance was chosen because that is the distance that is specified in FMVSS No. 108 and CMVSS No. 108 for testing reflex reflectors using a goniometer in a photometric laboratory.
A black Dodge Journey was parked across the left side of the pavement with a passenger-side headlamp containing a front side reflex reflector known to not meet FMVSS No. 108 and CMVSS No. 108 photometric requirements. A red Dodge Journey was parked across the right side of the pavement with a driver-side headlamp containing a front side reflex reflector known to meet FMVSS No. 108 and CMVSS No. 108 photometric requirements.
A 2019 Jeep Cherokee with LED projector headlamps and a 2019 Ram 1500 Pickup Truck with LED reflector headlamps were used as sources of illumination. Evaluators stood immediately in front of, and at the centerline of, the vehicles whose headlamps were being used as the source of illumination. Evaluators were asked if they were able to distinguish a difference between the reflex reflectors.
Five different scenarios were subjectively evaluated as described below:
FCA US submitted a supplemental petition dated May 14, 2019, and provided the following supplemental information:
The original subjective evaluation was conducted on March 22, 2019, in the Lighting Tunnel at the FCA Canada Automotive Research and Development Center in Windsor, Ontario, Canada, with headlamps of two different vehicles used as sources of illumination. The first vehicle used as a source of illumination was a Jeep Cherokee that had a headlamp mounting height of 34.89 inches above ground (as measured to the center of the device). The second vehicle used as a source of illumination was a Ram 1500 Pickup Truck that had a headlamp mounting height of 39.59 inches above ground (as measured to the center of the device).
This follow-up evaluation was conducted using an Alfa Romeo Giulia that had a headlamp mounting height of 26.50 inches above ground (as measured to the center of the device). This vehicle was chosen to demonstrate a scenario of a vehicle with low headlamp mounting heights being used as the source of illumination. (Please note the lettering is sequential to those used in the previous March 22, 2019 report.)
This evaluation was conducted with two Dodge Journey vehicles parked front end to front end across the road surface, 100 feet (30.5 meters) away from an Alfa Romeo Giulia vehicle that used its headlamps as a source of illumination for observers to evaluate the luminous intensity of each front side reflex reflector. The 100 feet (30.5 meters) distance was chosen because that is the distance that is specified in FMVSS No. 108 and CMVSS No. 108 for testing reflex reflectors using a goniometer in a photometric laboratory.
A red Dodge Journey was parked across the left side of the pavement with a passenger-side headlamp containing a front side reflex reflector known to not meet FMVSS No. 108 and CMVSS No. 108 photometric requirements. Another red Dodge Journey was parked across the right side of the pavement with a driver-side headlamp containing a front side reflex reflector known to meet FMVSS No. 108 and CMVSS No. 108 photometric requirements. These were the same headlamp assemblies and side reflex reflectors that were used for the previous subjective evaluation that occurred on March 22, 2019.
A 2019 Alfa Romeo Giulia with Bi-Xenon Projector Headlamps (25 watt D5S light sources) was used as the
Four different scenarios were subjectively evaluated as described below:
FCA US concluded by expressing its belief that the subject noncompliance is inconsequential as it relates to motor vehicle safety, and that its petition to be exempted from providing notification of the noncompliance, as required by 49 U.S.C. 30118, and a remedy for the noncompliance, as required by 49 U.S.C. 30120, should be granted.
NHTSA notes that the statutory provisions (49 U.S.C. 30118(d) and 30120(h)) that permit manufacturers to file petitions for a determination of inconsequentiality allow NHTSA to exempt manufacturers only from the duties found in sections 30118 and 30120, respectively, to notify owners, purchasers, and dealers of a defect or noncompliance and to remedy the defect or noncompliance. Therefore, any decision on this petition only applies to the subject equipment and vehicles that FCA US no longer controlled at the time it determined that the noncompliance existed. However, any decision on this petition does not relieve equipment and vehicle distributors and dealers of the prohibitions on the sale, offer for sale, or introduction or delivery for introduction into interstate commerce of the noncompliant equipment and vehicles under their control after FCA US notified them that the subject noncompliance existed.
(49 U.S.C. 30118, 30120: Delegations of authority at 49 CFR 1.95 and 501.8)
Build America Bureau, U.S. Department of Transportation.
Request for Information (RFI).
The Fixing America's Surface Transportation Act (FAST),
The Build America Bureau (the Bureau) of the U.S. Department of Transportation (Department or DOT) is seeking input from interested parties with the intent to gather as much information as possible before implementing the Program.
The Bureau is issuing this RFI on the most effective, transparent and expedient way to implement the Program. Information gleaned from this effort will help inform the development of the Program and approach to designating and funding Regional Infrastructure Accelerators that will: (1) Serve a defined geographic area; and (2) act as a resource to qualified entities in the geographic area in accordance with Section 1441 of the FAST Act.
Responses to this RFI are due no later than 11:59 p.m. 30 days after publication of this notice. The Bureau may hold an RFI information session(s) before the due date.
All responses MUST be submitted electronically via email to the Bureau at
For further information regarding this RFI please contact Sam Beydoun via email at
The Bureau is responsible for driving transportation infrastructure development projects in the United States through innovative financing programs. Its mission is to provide access to the Bureau's credit programs in a streamlined, expedient and transparent manner. In accomplishing its mission, the Bureau also provides technical assistance and encourages innovative best practices in project planning, financing, delivery, and monitoring. The Bureau draws upon the full resources of the Department of Transportation to best utilize the expertise of the Department's Operating Administrations while promoting a culture of innovation and customer service.
The Transportation Infrastructure Finance and Innovation Act of 1998
Section 1441 of the FAST Act (
The goal of this RFI is to engage interested parties to obtain input into the most effective, transparent and expedient ways to structure and deliver the Program. Respondents to this RFI are encouraged to provide related information and answers to one or more of the following:
(1) What would be an effective form of the accelerator that could influence the development of infrastructure projects, and what type of structure and authority would be required for the establishment of a regional accelerator? Are there examples of such entities from around the country and abroad, or in other sectors that could be used as a model for the Program?
(2) What barriers such as regulatory, technical and institutional (public or private) would hinder implementation? What authority should the accelerator(s) have to effectively carry out its mission?
(1) What is the most effective regional approach in achieving geographic diversity?
(2) What consideration should be given to urban versus rural areas, regional verses statewide or multi-State accelerators?
(3) Given the appropriated amount ($5 million), what would be the optimum range and most effective number of awards for regional accelerators? What would be an appropriate size program to consider in addressing the needs of priority infrastructure projects in rural areas?
(1) What resources, competencies and experience would be required from and within an accelerator? The approach should consider the resources required in accelerating the development of smaller rural projects and assisting inexperienced or under-resourced regions.
(2) If external resources and expertise would be contemplated, what would be the acquisition strategy while ensuring transparency and accountability?
(3) What is the best way to conduct an effective and transparent selection process? What evaluation criteria should the Bureau consider?
(1) What is the most effective approach to achieve the goals of the Program through an accelerator? In responding, please address considerations for the creation, selection and designation of regional accelerator(s).
(2) What actions are required to plan, implement and assess effectiveness of regional accelerators? If your response considers a phased approach, what would be the activities, resources and timelines for each phase? If new entities are considered, how much time would be needed to stand up a regional accelerator and what would be the major challenges?
(3) How could an accelerator leverage the Federal funding beyond the initial Federal support? If feasible, could a standalone, self-funded and sustainable model continue to deliver the intended benefits under the Program?
(4) Rural transportation infrastructure is of critical interest to the Department. How could Regional Infrastructure Accelerators assist in supporting priority programs in the region such as Rural Opportunities to Use Transportation for Economic Success (ROUTES) and the Bureau's Railroad Rehabilitation & Improvement Financing (RRIF) credit program that further accelerate projects?
(1) How would Bureau assess and monitor the success of the program in accomplishing the goals and objectives?
(2) What would be appropriate key performance indicators that help measure the effectiveness of this demonstration program? Please consider the planned activities under the Program as indicated in Section 1441 of the FAST Act.
(1) What else should the Bureau consider (in addition to the statutory criteria in Section 1441 of the FAST Act) and/or do to ensure an effective and successful regional accelerator program?
Individuals or entities wishing to respond to the RFI should state their role as well as knowledge and experience in developing or delivering such programs. The Bureau may request additional clarifying information from any or all respondents. Responses shall not exceed 10 pages and have no smaller than 12-point font with 1-inch margin all around. Any additional documents (
This RFI does NOT constitute a Request for Proposal and is not to be construed as a commitment, implied or otherwise, by the Bureau or the Department that a procurement action will be issued. Any response related to this RFI is not a request to be added to a bidders list or to receive a copy of a solicitation. There is no entitlement to payment for direct or indirect costs or charges arising as a result of any potential inquiries regarding this solicitation. The Bureau may not respond to any specific questions or comments submitted in response to this notice or information provided as a result of this notification. This RFI is solely for information and planning purposes and should not be construed as a commitment by Bureau or Department for any other purpose.
All interested parties are encouraged to respond fully to this RFI. The Bureau is in no way obligated by the information received and submission by respondents to the RFI is strictly voluntary. Not responding to the RFI does not preclude participation in any future procurement or grant program, if any is issued. However, the Bureau places tremendous value on information received and may utilize it to implement and finalize its Program development strategy.
ALL INFORMATION SUBMITTED SHALL BE
Notification of Citizens Coinage Advisory Committee March 10-11, 2020, Public Meeting.
The United States Mint announces the Citizens Coinage Advisory Committee (CCAC) public meeting scheduled for March 10, 2020 and March 11, 2020.
Interested members of the public may either attend the meeting in person or dial in to listen to the meeting at (866) 564-9287/Access Code: 62956028.
Interested persons should call the CCAC HOTLINE at (202) 354-7502 for the latest update on meeting time and room location.
Any member of the public interested in submitting matters for the CCAC's consideration is invited to submit them by email to
The CCAC advises the Secretary of the Treasury on any theme or design proposals relating to circulating coinage, bullion coinage, Congressional Gold Medals, and national and other medals; advises the Secretary of the Treasury with regard to the events, persons, or places to be commemorated by the issuance of commemorative coins in each of the five calendar years succeeding the year in which a commemorative coin designation is made; and makes recommendations with respect to the mintage level for any commemorative coin recommended.
Members of the public interested in attending the meeting in person will be admitted into the meeting room on a first-come, first-serve basis as space is limited. Conference Room A&B can accommodate up to 50 members of the public at any one time. In addition, all persons entering a United States Mint facility must adhere to building security protocol. This means they must consent to the search of their persons and objects in their possession while on government grounds and when they enter and leave the facility, and are prohibited from bringing into the facility weapons of any type, illegal drugs, drug paraphernalia, or contraband.
The United States Mint Police Officer conducting the screening will evaluate whether an item may enter into or exit from a facility based upon Federal law, Treasury policy, United States Mint policy, and local operating procedure; and all prohibited and unauthorized items will be subject to confiscation and disposal.
Jennifer Warren, United States Mint Liaison to the CCAC; 801 9th Street NW; Washington, DC 20220; or call 202-354-7208.
31 U.S.C. 5135(b)(8)(C).
National Cemetery Administration (NCA), Department of Veterans Affairs.
Notice.
National Cemetery Administration (NCA), Department of Veterans Affairs (VA), is announcing an opportunity for public comment on the proposed collection of certain information by the agency. Under the Paperwork Reduction Act (PRA) of 1995, Federal agencies are required to publish notice in the
Written comments and recommendations on the proposed collection of information should be received on or before April 28, 2020.
Submit written comments on the collection of information through Federal Docket Management System (FDMS) at
Ms. Cynthia Harvey-Pryor at (202) 461-5870.
Under the PRA of 1995, Federal agencies must obtain approval from the Office of Management and Budget (OMB) for each collection of information they conduct or sponsor. This request for comment is being made pursuant to Section 3506(c)(2)(A) of the PRA.
With respect to the following collection of information, NCA invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of NCA's functions, including whether the information will have practical utility; (2) the accuracy of NCA's estimate of the burden of the proposed collection of information; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or the use of other forms of information technology.
Estimated Number of Respondents: 19,000.
Estimated Number of Respondents: 6,000.
Estimated Number of Respondents: 50.
Estimated Number of Respondents: 50.
Estimated Number of Respondents: 50.
By direction of the Secretary.
Securities and Exchange Commission.
Proposed rule.
We are proposing amendments to modernize, simplify, and enhance certain financial disclosure requirements in Regulation S-K. Specifically, we are proposing to eliminate Item 301 of Regulation S-K, Selected Financial Data and Item 302 of Regulation S-K, Supplementary Financial Information because they are largely duplicative of other requirements and to amend Item 303 of Regulation S-K, Management's Discussion & Analysis of Financial Condition and Results of Operations (“MD&A”) to modernize and enhance MD&A disclosures. In combination, the proposed amendments are intended to eliminate duplicative disclosures and modernize and enhance MD&A disclosures for the benefit of investors, while simplifying compliance efforts for registrants.
Comments should be received by April 28, 2020.
Comments may be submitted by any of the following methods:
• Use the Commission's internet comment forms (
• Send an email to
• Send paper comments to Vanessa A. Countryman, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
We or the staff may add studies, memoranda, or other substantive items to the comment file during this rulemaking. A notification of the inclusion in the comment file of any such materials will be made available on our website. To ensure direct electronic receipt of such notifications, sign up through the “Stay Connected” option at
Angie Kim, Special Counsel, or Courtney Lindsay, Special Counsel, Office of Rulemaking, at (202) 551-3430, or Ryan Milne, Associate Chief Accountant, Office of the Chief Accountant, at (202) 551-3400 in the Division of Corporation Finance, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.
The Commission is proposing to remove and reserve 17 CFR 229.301 (“Item 301”) and 17 CFR 229.302 (“Item 302”) of Regulation S-K under the Securities Act of 1933 (the “Securities Act”) and the Securities Exchange Act of 1934 (the “Exchange Act”). The Commission is also proposing to amend 17 CFR 210.1-02(bb) of Regulation S-X (“Rule 1-02(bb)”); 17 CFR 229.303 (“Item 303”) and 17 CFR 229.914 (“Item 914”) of Regulation S-K under the Securities Act and the Exchange Act; 17 CFR 229.1112 (“Item 1112”), 17 CFR 229.1114 (“Item 1114”) and 17 CFR 229.1115 (“Item 1115”) of Regulation AB (a subpart of Regulation S-K) under the Securities Act and the Exchange Act; 17 CFR 239.11 (“Form S-1”), 17 CFR 239.20 (“Form S-20”), 17 CFR 239.25 (“Form S-4”), 17 CFR 239.31 (“Form F-1”) and 17 CFR 239.34 (“Form F-4”) under the Securities Act; 17 CFR 240.14a-101 (“Schedule 14A”) under the Exchange Act; and 17 CFR 249.220f (“Form 20-F”), 17 CFR 249.240f (“Form 40-F”), and 17 CFR 249.308 (“Form 8-K”) under the Exchange Act.
We are proposing certain amendments to Regulation S-K, and related rules and forms. Specifically, we are proposing (1)
While the disclosure requirements for Item 9 of Form 1-A for Regulation A issuers are similar to the MD&A requirements under Item 303, we are not proposing to amend Form 1-A at this time.
Based on a recommendation in the
Similarly, to facilitate public input on the Disclosure Effectiveness Initiative, members of the public were invited to submit comments.
In connection with the FAST Act Report, the Commission proposed and then adopted certain amendments to Regulation S-K.
In developing the proposed amendments, we considered input from comment letters the Commission received on the initiatives described above. We also took into account the staff's experience with Regulation S-K arising from the Division of Corporation Finance's disclosure review program and changes in the regulatory and business landscape since the adoption of Regulation S-K over 40 years ago. Regulation S-K was adopted in 1977 to foster uniform and integrated disclosure for registration statements under both the Securities Act and the Exchange Act, and other Exchange Act filings, including periodic and current reports.
Additionally, we reviewed Items 301, 302, and 303 in light of advancements in technology (in particular the availability of past financial statements and other disclosure made in filings on the Commission's Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system) and changes in requirements under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). We also considered the benefits and appropriateness of a principles-based approach in reviewing these Items and our proposals are intended to promote the principles-based nature of MD&A.
We are proposing changes to Items 301, 302, and 303 of Regulation S-K that would reduce duplicative disclosure and focus on material information. Specifically, we propose to eliminate:
• Item 301—Selected Financial Data;
• Item 302—Supplementary Financial Information; and
• Item 303(a)(5)—MD&A,
We are also proposing changes to modernize, simplify, and enhance disclosure requirements in Item 303 in order to improve these disclosures for investors and simplify compliance efforts for registrants. Specifically, these proposed revisions would:
• Add a new Item 303(a),
• Amend Item 303(a),
• Replace Item 303(a)(4),
• Add a new Item 303(b)(4),
• Eliminate current Item 303(c),
• Eliminate Item 303(d),
We are also proposing certain parallel amendments to Forms 20-F and 40-F, including Item 3.A of Form 20-F (Selected Financial Information), Item 5 of Form 20-F (Operating and Financial Review and Prospects), General Instruction B.(11) of Form 40-F (Off-Balance Sheet Arrangements), and General Instruction B.(12) of Form 40-F (Tabular Disclosure of Contractual Arrangements).
We discuss the proposed amendments below in the order that each Item appears in Regulation S-K. We welcome feedback and encourage interested parties to submit comments on any or all aspects of the proposals. When commenting, it would be most helpful if you include the reasoning behind your position or recommendation.
Item 301
SRCs are not required to provide Item 301 information.
In the Concept Release, the Commission solicited comment on whether to retain, modify, or eliminate Item 301.
Many commenters recommended eliminating Item 301 completely or questioned its usefulness.
One of these commenters noted the potentially significant costs in public offerings for comfort letters associated with this disclosure.
Another commenter encouraged the Commission to ask investors whether the utility of the information provided in response to Item 301 justify the costs of presenting it.
Many commenters recommended revising Item 301 to allow registrants to omit the earliest two years.
A few commenters supported retaining Item 301.
We propose to eliminate Item 301. When the precursor to Item 301 was adopted in 1970, prior annual reports were not quickly and easily accessible.
In adding the requirement for selected financial data to Regulation S-K, the Commission stated that Item 301 was “relevant primarily where it can be related to trends in the registrant's continuing operations.”
We acknowledge that some commenters suggested we revise Item 301 to require only presentation of the same number of years as included in the financial statements, or otherwise provide accommodations to limit the number of years presented. However, we believe that such an approach would result in disclosure that would be largely duplicative of information in the financial statements, and therefore may have limited utility. We also acknowledge that some commenters recommended that we retain Item 301 without any revisions or enhance the item requirement. We believe, however, that the incremental utility of having a full five years of selected financial information is not justified by the cost to prepare such disclosures, particularly since Item 303 already requires disclosure of material trends and such other information necessary to an understanding of the registrant's financial conditions, changes in financial condition, and results of operations.
1. Should we eliminate Item 301, as proposed? Would eliminating Item 301 result in the loss of material information that is otherwise not available to investors, such as through prior filings on EDGAR? If so, what information would be lost, and are there alternatives we should consider that would capture this information?
2. Is the option for investors to compile selected financial information from current or prior filings an adequate substitute for the separate presentation of that information in Item 301? Do current XBRL-tagging requirements facilitate compilation and comparison of selected financial information?
3. Are the requirements of Item 303 sufficient to provide investors with necessary disclosure regarding trends in a registrant's results of operations and financial condition?
4. Alternatively, if Item 301 should be retained, should registrants be allowed to provide less than five years of selected financial data? If so, what is the appropriate number of years that should be provided, and in what circumstances?
5. What are the costs to registrants of providing five years of selected financial data? Would those costs significantly decrease if the Commission limited selected financial data to only those years presented in the filing's historical financial statements?
6. How do market participants use the selected financial data disclosures? Do market participants rely on any particular fiscal year or years more than others (
7. Would registrants continue to provide selected financial data even if they are no longer required to do so? If so, for how many years?
8. If we were to retain Item 301, should we modify the line items required to be included in the presentation pursuant to Instruction 2?
9. The Commission recently proposed to extend to BDCs the requirement for registered closed-end investment companies to disclose “financial highlights.”
Item 302(a)(1) requires disclosure of selected quarterly financial data of specified operating results
In the Concept Release, the Commission solicited input on whether to retain, eliminate, or modify Item 302(a). The Commission also solicited input on the importance of information required by Item 302(a) that is not duplicative of previously provided information, such as a separate presentation of certain fourth quarter information and the effect of a retrospective change in the earliest of the two years.
A few commenters recommended retaining and expanding Item 302(a).
Multiple commenters recommended streamlining Item 302(a).
Most commenters recommended eliminating Item 302(a) altogether,
We propose to eliminate Item 302(a). Like many commenters, we believe that this prescriptive requirement largely results in duplicative disclosures. The precursor to Item 302 was adopted at a time when quarterly data was “reported on an extremely abbreviated basis.”
Eliminating Item 302(a) may result in the loss of a separate presentation of certain fourth quarter information and, where applicable, the effect of a retrospective change in the earliest of the two years.
10. Should we eliminate Item 302(a), as proposed? Would eliminating Item 302(a) result in the loss of material information that is otherwise not available to investors, such as through prior filings on EDGAR? If so, what material information would be lost, and are there alternatives we should consider that would capture this information?
11. Do market participants find Item 302(a) disclosures to be helpful? If so, how do market participants use the disclosures? Does the utility of the disclosures vary by industry or business? If so, for which industries or businesses are Item 302(a) disclosures helpful?
12. Is the option for investors to compile supplemental financial information through searches of prior filings an adequate substitute for Item 302(a)? Do current XBRL-tagging requirements reliably facilitate compilation and comparison of supplemental financial information? Would there be a cost to investors of compiling and/or calculating information presented in Item 302(a) from other sources and, if so, what would that cost be?
13. What are the burdens on registrants to provide the information required by Item 302(a)?
14. Is a separate presentation of certain fourth quarter data material to investors? If so, is such information material for all companies or industries? Are investors able to readily calculate this fourth quarter data from a registrant's Form 10-K and related third quarter Form 10-Q? What are the challenges to making such calculations?
15. Would registrants continue to provide fourth quarter data in the absence of a requirement to do so (
16. Should we retain Item 302(a) but allow a newly reporting registrant to exclude Item 302(a) data for interim periods prior to those presented in its IPO registration statement?
Item 302(b)
In 2018, the Commission referred certain of its disclosure requirements to the FASB for potential incorporation into U.S. GAAP because these items largely overlapped with, but required information incremental to, U.S. GAAP.
On May 6, 2019, the FASB issued proposed Accounting Standards Update,
17. As proposed, should we eliminate Item 302(b) if the FASB amends U.S. GAAP to require substantially similar disclosure?
Item 303 of Regulation S-K requires disclosure of information relevant to assessing a registrant's financial condition, changes in financial condition, and results of operations. The disclosure requirements for full fiscal years in Item 303(a) specify five components: Liquidity, capital resources, results of operations, off-balance sheet arrangements, and contractual obligations.
The Concept Release solicited comment on the overall objectives of the current MD&A requirements, as well as specific subsections of Item 303, including how to improve the content and focus of MD&A. Many commenters responded to the Commission's request
We propose further amendments to Item 303 of Regulation S-K that are intended to modernize, simplify, and enhance the MD&A disclosures for investors while reducing compliance burdens for registrants.
• Establish a new paragraph 303(a) that incorporates much of the substance of Instructions 1, 2, and 3 to current Item 303(a) to emphasize the objective of MD&A for both full fiscal years and interim periods;
• Recaption current Item 303(a) as Item 303(b), and make the following additional changes:
○ Streamline current Item 303(a) by eliminating unnecessary cross-references to industry guides in Instructions 13 and 14;
○ Amend current Item 303(a)(2) to modernize and enhance the current requirement, which is limited to capital expenditures, to specifically require a discussion of material cash requirements;
○ Amend current Item 303(a)(3)(ii) to clarify that a registrant should disclose reasonably likely changes in the relationship between costs and revenues;
○ Amend current Item 303(a)(3)(iii) and Instruction 4 to Item 303(a) to enhance analysis in MD&A by clarifying that a registrant should include in its MD&A a discussion of the reasons underlying material changes from period-to-period in one or more line items;
○ Eliminate current Item 303(a)(3)(iv), which requires registrants to discuss the impact of inflation and changing prices where material, along with the related Instructions 8 and 9 to Item 303(a);
○ Replace current Item 303(a)(4), the requirement that registrants provide off-balance sheet arrangement disclosures in a separately captioned section, with an instruction emphasizing the importance of discussing these obligations in the broader context of MD&A disclosure when such obligations have or are reasonably likely to have a material current or future effect on a registrant's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources; and
○ Eliminate current Item 303(a)(5), the requirement that registrants provide a tabular disclosure of contractual obligations;
• Recaption Item 303(b) as Item 303(c) and:
○ Amend current Item 303(b) to allow for more flexibility in interim periods compared; and
○ Simplify current Item 303(b) by eliminating certain instructions and providing cross-references to similar instructions in Item 303(a); and
• Eliminate current Items 303(c) and (d) as conforming changes.
The following table outlines the current and proposed structure of Item 303:
The first paragraph of current Item 303(a) instructs registrants to discuss their financial condition, changes in financial condition, and results of operations for full fiscal years.
We are proposing multiple changes that are intended to streamline and clarify the purposes of Item 303.
• Material information relevant to an assessment of the financial condition and results of operations of the registrant, including an evaluation of the amounts and certainty of cash flows from operations and from outside sources.
• The material financial and statistical data that the registrant believes will enhance a reader's understanding of the registrant's financial condition, changes in financial condition, and results of operations.
• Material events and uncertainties known to management that would cause reported financial information not to be necessarily indicative of future operating results or of future financial condition. This would include descriptions and amounts of matters that: (i) Would have a material impact on future operations and have not had an impact in the past, and (ii) have had a material impact on reported operations and are not expected to have an impact on future operations.
We are also proposing to codify Commission guidance that states that a registrant should provide a narrative explanation of its financial statements that enables investors to see a registrant “through the eyes of management”
In light of our proposal to add new Item 303(a), we propose to re-caption current Item 303(a) as Item 303(b), which will continue to apply to all MD&A disclosures.
We also propose to move to proposed Item 303(b) the portion of current Instruction 4 to Item 303(a) that requires a description of the causes of material changes from year-to-year in line items of the financial statements to the extent necessary to an understanding of the registrant's business as a whole.
Similarly, another commenter recommended revising Item 303(a)(3) to require a description of the major factors that caused changes in line items (
We propose to amend the language of Instruction 4 to Item 303(a),
We also are proposing several amendments to further streamline the text of Item 303:
• We propose to move the text in current Item 303(a) stating that registrants may combine their discussions of liquidity and capital resources when the topics are interrelated to an instruction to the item.
• Instruction 8 to current Item 303(b) indicates that the term “statement of comprehensive income” is defined by Rule 1-02 of Regulation S-X.
• We also propose to eliminate current Instructions 13 and 14 to Item 303(a) as simplifying amendments. These instructions call the attention of bank holding companies and property-casualty insurance companies to Guide 3
18. Should we adopt proposed Item 303(a)? Would proposed Item 303(a) clarify the purpose of MD&A disclosures for registrants and others? Would the proposed amendments aid registrants in determining what to disclose in their MD&A?
19. Should we incorporate the language from current Instruction 4 to Item 303(a) into proposed Item 303(b), as proposed? Should we amend this language to require disclosure of the underlying reasons for material changes in quantitative and qualitative terms, including material changes within a line item, as proposed?
20. Are there any instructions that we are proposing to delete or move that we should retain or leave as is? Are there any other current instructions that we should revise or clarify?
21. Should we eliminate Instructions 13 and 14 to Item 303(a) that reference Guides 3 and 6, as proposed? Should we instead include additional instructions to reference the other industry guides?
Item 303(a)(2) requires a registrant to discuss its material commitments for capital expenditures as of the end of the latest fiscal period, and to indicate the general purpose of such commitments and the anticipated sources of funds needed to fulfill such commitments.
When adopting disclosure requirements for capital resources, the Commission recognized that the term “capital resources” lacked precision, but stated that “additional specificity would decrease the flexibility needed by management for a meaningful discussion.”
The Concept Release solicited comment on how the Commission could revise Item 303(a) to elicit a more meaningful analysis of a registrant's capital resources while maintaining flexibility.
Some commenters observed differences in how registrants apply the term “capital resources.”
Some commenters supported the Commission's current approach to the term “capital resources.”
We continue to believe that disclosure of capital resources is critical to an assessment of a registrant's prospects for the future and likelihood of its survival.
This proposal is intended to require registrants to identify and disclose known material cash requirements. Depending on the registrant, this could include items such as: Funds necessary to maintain current operations, complete projects underway, and achieve stated objectives or plans; or commitments for capital or other expenditures.
These proposals, alongside the current requirement for registrants to discuss their ability to generate cash,
22. Should we amend Item 303(a)(2), as proposed? Would the proposed amendments continue to allow management flexibility to provide a meaningful discussion of capital resources?
23. Are there other aspects of Item 303(a)(2) we should revise? If so, which aspects?
Item 303(a)(3)(ii) requires a registrant to describe any known trends or uncertainties that have had or that the registrant reasonably expects will have a material impact (favorable or unfavorable) on net sales or revenues or income from continuing operations.
We propose to amend Item 303(a)(3)(ii)
“Where a trend, demand, commitment, event or uncertainty is known, management must make two assessments:
(1) Is the known trend, demand, commitment, event or uncertainty likely to come to fruition? If management determines that it is not reasonably likely to occur, no disclosure is required.
(2) If management cannot make that determination, it must evaluate objectively the consequences of the known trend, demand, commitment, event or uncertainty, on the assumption that it will come to fruition. Disclosure is then required unless management determines that a material effect on the registrant's financial condition or results of operations is not reasonably likely to occur.”
24. Should we amend Item 303(a)(3)(ii) to provide that registrants must disclose events reasonably likely to cause a material change in the relationship between costs and revenue, as proposed? Are there other areas in Item 303 where we should provide a similar requirement?
Item 303(a)(3)(iii) specifies that, to the extent financial statements disclose material increases in net sales or revenues, a registrant must provide a narrative discussion of the extent to which such increases are attributable to increases in prices, or to increases in the volume or amount of goods or services being sold, or to the introduction of new products or services.
25. Should we revise Item 303(a)(3)(iii), as proposed?
26. Are there reasons other than changes in prices, or changes in volume or amount of goods or services being sold, or the introduction of new products or services that can contribute to changes in revenue or net sales, or other line items? If so, what are they? Would enumerating other reasons aid registrants in determining what information may be necessary to understand material changes in line items, or would this result in a
Item 303(a)(3)(iv)
The precursors to Item 303(a)(3)(iv) and Instructions 8 and 9 were adopted in 1980,
Although Instruction 8 to Item 303(a) specifies that a discussion of inflation and other changes in prices is required only when such matters are considered material, we believe that the reference to inflation and changing prices may give undue attention to the topic, even when such information is not necessary to an understanding of a registrant's financial condition or results of operations. In order to encourage registrants to focus their MD&A on material information that is tailored to their respective facts and circumstances, we propose to eliminate Item 303(a)(3)(iv) and current Instruction 8 and Instruction 9 to Item 303(a).
We do not believe that these proposed changes would result in a loss of material information. Despite these proposed deletions, registrants would still be expected to discuss the impact of inflation or changing prices if they are part of a known trend or uncertainty that has had, or the registrant reasonably expects to have, a material favorable or unfavorable impact on net sales, or revenue, or income from continuing operations.
In addition, the proposed amendments to current Item 303(a)(3)(iii)
27. Should we eliminate the references to inflation disclosure by eliminating Item 303(a)(3)(iv) and Instructions 8 and 9 to Item 303(a), as proposed? Would there be a loss of material information if we eliminate these provisions?
Item 303(a)(4)
• The nature and business purpose of such off-balance sheet arrangements;
• The importance to the registrant of such off-balance sheet arrangements in respect of its liquidity, capital resources, market risk support, credit risk support, or other benefits;
• The amounts of revenues, expenses, and cash flows arising from such arrangements; the nature and amounts of any interests retained, securities
• Any known event, demand, commitment, trend, or uncertainty that will result in or is reasonably likely to result in the termination, or material reduction in availability, of a registrant's off-balance sheet arrangements that provide material benefits, and the course of action that the registrant has taken or proposes to take in response to any such circumstances.
In 2002, the Commission issued a statement that the quality of disclosure of off-balance sheet arrangements in MD&A should be improved.
The 2002 Commission Statement was consistent with Commission rules and guidance at the time. For example, Item 303(a)(2)(ii) specifically requires registrants to disclose off-balance sheet financing arrangements in their discussion of capital resources.
Several months after the 2002 Commission Statement, the Sarbanes-Oxley Act
In the release proposing Item 303(a)(4), the Commission recognized that parts of the proposed off-balance sheet disclosure requirements might overlap with disclosure presented in the footnotes to the financial statements.
Since the adoption of Item 303(a)(4), the FASB has issued additional requirements that have caused U.S. GAAP to further overlap with the item.
In the Concept Release, the Commission solicited comment on the importance of disclosure elicited by Item 303(a)(4) and whether and how we should amend the requirements. Some commenters supported retaining the requirements.
Several commenters encouraged the Commission to eliminate or amend Item 303(a)(4), stating that the requirements substantially overlap with U.S. GAAP.
In light of the updates made to U.S. GAAP that result in substantial overlap between U.S. GAAP and Item 303(a)(4) of Regulation S-K, and consistent with our other proposed amendments intended to promote the principles-based nature of MD&A, we believe that the current more prescriptive off-balance sheet arrangement definition and related disclosure requirement in Item 303(a)(4) should be replaced with a principles-based instruction. Specifically, we propose to replace current Item 303(a)(4) with a new Instruction to Item 303(b) that would require registrants to discuss commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have, or are reasonably likely to have, a material current or future effect on a registrant's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements, or capital resources.
The proposed amendment should result in greater integration of material off-balance sheet arrangements disclosure within the context of broader MD&A disclosures as those arrangements enumerated in Item 303(a)(4) may be discussed more cohesively with other off-balance sheet arrangements that are not enumerated in Item 303(a)(4). We believe this could result in more effective discussion of the impact of these arrangements. Commission staff and commenters have observed that the current requirements often result in boilerplate disclosure or a duplication of disclosures in the financial statements. Further, Item 303(a)(4)'s requirement for disclosure in a separately captioned section often results in a disjointed presentation of off-balance sheet arrangements that may lack the necessary context of how these obligations should be considered in light of a registrant's overall financial condition. We believe that the proposed amendment would result in disclosure that would be more useful to understanding the impact of off-balance sheet arrangements, and may help avoid boilerplate or disjointed disclosure.
We acknowledge that, as discussed above, certain Item 303(a)(4) requirements related to the location, presentation, and nature of the disclosure do not overlap with U.S. GAAP. However, we believe that proposed Instruction 8 would mitigate any potential loss of information by requiring a discussion of material matters of liquidity, capital resources, and financial condition as they relate to off-balance sheet arrangements. Below, we seek comment on what material information, if any, may be lost if we adopt the proposed amendments.
Unlike Item 303(a)(4), the proposed instruction would not define “off-balance sheet arrangements.” Rather, it states that discussion of commitments or obligations, including contingent obligations, of the registrant arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on a registrant's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements, or capital resources shall be provided even when the arrangement results in no obligations being reported in the registrant's consolidated balance sheets. The instruction provides examples of such arrangements that are substantially the same as those included in the current definition of off-balance sheet arrangements in Item 303(a)(4), including: Guarantees; retained or contingent interests in assets transferred; contractual arrangements that support the credit, liquidity, or market risk for assets transferred; obligations that arise or could arise from variable interests held in an
While the examples in the proposed instruction are substantially the same as those in the current off-balance sheet arrangements definition in Item 303(a)(4), the examples do not include references to specific paragraphs in U.S. GAAP. Despite the elimination of these cross-references, the amendments are not intended to broaden the types of arrangements for which MD&A disclosure would be required. In this regard, under existing MD&A requirements, registrants are required to discuss in MD&A any known demands, commitments, events or uncertainties that will result in or that are reasonably likely to result in the registrant's liquidity decreasing in any material way, even if the known demand did not meet the definition of an off-balance sheet arrangement in Item 303(a)(4). Under the proposed amendments, those same arrangements would continue to be required to be discussed in MD&A. For the same reason, the proposed amendments also would not narrow the scope of what would be required to be disclosed in MD&A. The primary difference from what is currently required, and would be required under the proposed amendments, is that the discussion would no longer occur in a separately-captioned section; but rather, it would be made in the context of a more holistic, principles-based analysis.
We considered whether our proposal is consistent with Section 13(j) of the Exchange Act, as added by Section 401(a) of the Sarbanes-Oxley Act, which required the Commission to adopt rules providing that each annual and quarterly financial report required to be filed with the Commission shall disclose all material off-balance sheet arrangements. We believe that Section 13(j) remains satisfied because, under proposed Instruction 8 to Item 303(b), disclosure of all material off-balance sheet arrangements would continue to be required in annual and quarterly reports. As discussed above, although a discussion of off-balance sheet arrangements would no longer be required to be provided in a separately captioned section, registrants would still be required to discuss such arrangements in the broader context of their MD&A disclosures.
We also propose to amend Items 2.03 and 2.04 of Form 8-K to include the definition of “off-balance sheet arrangements” that is currently in Item 303(a)(4). Currently, Form 8-K defines off-balance sheet arrangements by cross reference to Item 303(a)(4)(ii).
28. Should we amend the off-balance sheet arrangements disclosure requirement by replacing Item 303(a)(4) with Instruction 8 to Item 303(b), as proposed? Is the proposed instruction a sufficient replacement for the current requirement for a separately-captioned presentation of off-balance sheet arrangements?
29. Are there alternative approaches we should consider to address the potential for boilerplate or duplicative disclosure?
30. Would the proposed amendments result in the loss of material information to investors that would not be disclosed elsewhere? If so, what information would be lost? Are the proposed amendments sufficiently tailored to avoid discussion of immaterial off-balance sheet arrangements?
31. Would the proposed amendments result in more meaningful MD&A disclosures about off-balance sheet arrangements? Are the proposed amendments likely to reduce boilerplate or duplicative disclosure?
32. Should we amend Items 2.03 and 2.04 of Form 8-K to incorporate the definition of “off-balance sheet arrangements” that is currently in Item 303(a)(4), as proposed? Would the proposed amendments create any confusion as to when a reporting obligation under Item 2.03 or Item 2.04 of Form 8-K would be triggered?
Under Item 303(a)(5),
When the Commission implemented this disclosure requirement, its purpose was to ensure that aggregated information about contractual obligations was presented in one place.
In the Concept Release, the Commission solicited comment on the meaningfulness of disclosure elicited by Item 303(a)(5). Several commenters recommended retaining and enhancing this item requirement,
Many commenters, however, recommended that we simplify or eliminate Item 303(a)(5).
Several commenters recommended the Commission eliminate Item 303(a)(5), stating that the disclosure requirement is largely redundant with what is required in the financial statements.
In the FAST Act Report, Commission staff recommended eliminating the contractual obligations table while enhancing the liquidity discussion requirements.
Although the Commission did not propose to eliminate Item 303(a)(5) in the FAST Act Proposing Release,
As many commenters pointed out,
33. Should we eliminate the contractual obligations disclosure requirement, as proposed?
34. Would investors be deprived of material information under the proposal?
35. Is the disclosure of information related to contractual obligations in the notes to the financial statements an adequate substitute for its separate tabular presentation in Item 303(a)(5)? Would there be any costs or challenges to investors of compiling information required in Item 303(a)(5) from other sources and, if so, what would the costs or challenges be? Do current XBRL-tagging requirements facilitate compilation and comparison of such information?
36. How do market participants use the “payments due by period” information in the contractual obligations table and is the disclosure material to an investor's investment decision? If we eliminate Item 303(a)(5), should we require registrants to disclose information regarding the time periods in which material contractual obligations will become due?
37. If we eliminate the required table of contractual obligations, as proposed,
38. Should we retain the contractual obligations disclosure requirement in a modified form (
39. If we retain the current contractual obligations disclosure requirement, should we revise it to enhance the information provided to investors (
While not specified in Item 303, the Commission in prior guidance has stated that, while preparing MD&A, registrants should consider whether accounting estimates and judgments could materially affect reported financial information.
Specifically, in 2001, the Commission reminded registrants that, under the existing MD&A disclosure requirements, a registrant should address material implications of uncertainties associated with the methods, assumptions, and estimates underlying the registrant's critical accounting measurements.
In the 2003 MD&A Interpretive Release, the Commission addressed critical accounting estimates.
U.S. GAAP does not require a similar disclosure of estimates and assumptions in the notes to financial statements except in a limited number of circumstances.
In the Concept Release, the Commission noted that, despite its guidance, many registrants repeat the discussion of significant accounting policies from the notes to the financial statements in MD&A and provide limited additional discussion of the critical accounting estimates.
The Commission received a range of comments on critical accounting estimates. Many commenters acknowledged that registrants typically provide disclosure that is duplicative of their accounting policies or does not otherwise provide meaningful analysis of the estimates and assumptions involved.
Some commenters suggested that, if Item 303 is revised to address critical accounting estimates specifically, the Commission should not codify the Commission's guidance on disclosure of critical accounting estimates and related disclosure requirements as set forth in the 2003 MD&A Interpretive Release.
Other commenters suggested that the Commission coordinate with the FASB to enhance U.S. GAAP so that it requires these disclosures.
We propose to amend Item 303(a)
Our proposed amendments are also intended to clarify for registrants the required disclosures related to critical accounting estimates. To this end, our proposals define a critical accounting estimate as an estimate made in accordance with generally accepted accounting principles that involves a significant level of estimation uncertainty and has had or is reasonably likely to have a material impact on the registrant's financial condition or results of operations. By focusing the definition on estimation uncertainties, we intend to avoid any unnecessary repetition of significant accounting policy footnotes. For each critical accounting estimate, the proposed amendments would require registrants to disclose, to the extent material, why the estimate is subject to uncertainty, how much each estimate has changed during the reporting period, the sensitivity of the reported amounts to the material methods, assumptions, and estimates underlying the estimate's calculation.
We believe the proposed amendments would clarify for registrants the disclosures required to address any critical accounting estimates, help avoid boilerplate or duplicative disclosures, and provide investors with material information regarding critical accounting estimates. We also believe that the disclosure elicited by the proposed amendments would facilitate further understanding of an analysis of amounts reported in the financial statements by providing greater insight on the uncertainties involved in creating and applying an accounting policy and how significant accounting policies of registrants faced with similar facts and circumstances may differ.
We recognize that some of the disclosure that would be required under our proposals may be provided already under U.S. GAAP
We considered the potential for overlap with auditor communications of critical audit matters.
Additionally, our proposal to require critical accounting estimates would apply to EGCs. In contrast, disclosure of critical audit matters is not required for audits of EGCs.
40. Should we amend Item 303 to require disclosure of critical accounting estimates, as proposed?
41. Is the proposed definition of critical accounting estimates sufficiently clear? Are there alternative definitions that we should consider?
42. Should any registrants, such as SRCs, EGCs, or IPO issuers, be exempted from this proposed requirement? If so, which registrants, and should there be a time limitation on such an accommodation?
43. Would the proposed amendments result in disclosures that are duplicative of U.S. GAAP or IFRS, as applicable? If so, how? Are there alternatives we should consider to encourage registrants to provide disclosures that will supplement, rather than duplicate, disclosures that appear in the financial statements?
44. Would the proposed amendments provide clarity to registrants on disclosures regarding critical accounting estimates? Would the proposed amendments provide investors with material information regarding critical accounting estimates?
45. Some commenters suggested we issue a revised interpretive release addressing critical accounting estimates
46. The Commission has previously encouraged registrants to include, in their MD&A, explanations of the judgments and uncertainties affecting application of their accounting policies.
Item 303(b) requires registrants to provide MD&A disclosure for interim periods that enables market participants to assess material changes in financial condition and results of operations between certain specified periods.
The Commission adopted the precursor to current Item 303(b) as part of its effort to integrate and simplify its disclosure system.
The Commission recently solicited comment on the current quarterly reporting process and how the Commission can reduce the administrative burdens on reporting companies associated with this process while enhancing the investor protections associated with periodic reporting under the Exchange Act.
Multiple commenters responding to the Request for Comment recommended that the Commission consider allowing more flexibility in interim period MD&A, or otherwise streamline or eliminate certain discussion requirements.
Other commenters noted that Form 10-Q's prescribed disclosures ensure uniformity among registrants.
Several commenters encouraged the Commission to conduct further outreach with investors and companies.
We propose to amend Item 303(b) (to be renumbered as proposed Item 303(c)) to allow for flexibility in comparisons of interim periods and to simplify the item.
We believe that these changes would allow registrants additional flexibility to provide an analysis that they believe is most relevant to an understanding of the frequency and amplitude of past business cycles while also ensuring that investors have appropriate information to assess the comparisons being presented. We recognize that not all businesses are seasonal and a comparison to the corresponding quarter of the preceding year may not be as meaningful as a comparison to the preceding quarter. We also believe that this proposal would respond to commenters' concern about the need for flexibility in MD&A.
We are also proposing amendments to simplify Item 303(b) (to be renumbered as proposed Item 303(c)) that would:
• Eliminate the text that states that registrants need not provide a discussion of the impact of inflation and changing prices, consistent with the proposed amendments described above;
• Amend Item 303(b)(2) (proposed Item 303(c)(2)) material changes in results of operations—to break the requirements into two subsections:
○ Proposed Item 303(c)(2)(i) would continue to require registrants to discuss any material changes in their results of operations between the most recent year-to-date interim period(s) and the corresponding period(s) of the preceding fiscal year for which statements of comprehensive income are provided; and
○ Proposed Item 303(c)(ii) would, as discussed above, require registrants to compare their most recently completed quarter to either of the corresponding quarter of the prior year (as is currently required)
We are also proposing to eliminate language requiring registrants subject to Rule 3-03(b) of Regulation S-X
Finally, we are proposing to delete Instructions 2, 3, 5, 6, 7, and 8 to current paragraph (b).
47. Should we amend the interim period disclosure requirements in Item 303(b), as proposed? Alternatively, in order to permit registrants flexibility to choose their presentation in the manner that is most consistent with how their business is managed, should we allow registrants to include a discussion of material changes in the results of operations with respect to either the most recent fiscal year-to-date period or the most recent fiscal quarter? Are there other approaches we should consider?
48. What would the benefits and/or drawbacks be of allowing registrants more flexibility regarding the interim period comparisons they discuss in MD&A?
49. Would the ability to compare interim period information across registrants be significantly affected by allowing flexibility for interim period comparisons, as proposed?
50. How do market participants use Item 303(b) disclosures? What are the benefits and drawbacks of the current period-to-period comparisons requirements?
51. How would our proposed amendments affect registrants subject to Rule 3-03(b) of Regulation S-X? We are not proposing to eliminate Rule 3-03(b). If adopted, would the Commission's disclosure rules and guidance be sufficiently clear about disclosure these registrants must provide? What would the consequences of these proposed changes be for market participants?
Item 303(c)
The Commission added Item 303(c) in 2003 when it adopted Items 303(a)(4) and (5).
Nevertheless, forward-looking information included in off-balance sheet arrangement disclosures provided in response to proposed Instruction 8 to Item 303(b), along with disclosures regarding contractual obligations, would continue to be covered by existing safe harbors. The proposed amendments are intended to be conforming changes and would not alter the availability of the regulatory safe harbors in Securities Act Rule 175
Our proposed amendments are also not intended to alter the application of the statutory safe harbor provisions of the Private Securities Litigation Reform Act.
52. Should we eliminate Item 303(c), as proposed?
53. If we eliminate Item 303(c), is it necessary or helpful to provide a specific instruction referring to the statutory safe harbors for forward-looking statements that may apply to the proposed off-balance sheet arrangement disclosures? Should we instead retain Item 303(c) and acknowledge that the statutory safe harbors would apply to all of Item 303?
Item 303(d)
54. Should we eliminate Item 303(d), as proposed?
55. Are there any proposed amendments to Item 303 where we should consider providing further accommodations to SRCs?
56. Are there any other changes we should consider to Item 303 to streamline, update, or modernize MD&A disclosure requirements?
57. Should we require MD&A to be structured in Inline eXtensible Business Reporting Language (“Inline XBRL”) format?
58. Should we amend Item 9 of Form 1-A to reflect any of the proposals in this release?
We are proposing corresponding amendments that would apply to FPIs providing disclosure required by Form 20-F or Form 40-F.
Similar to Item 301, Item 3.A of Form 20-F requires FPIs to provide selected historical financial data for the most recent five financial years (or such shorter period that the company has been in operation). Also similar to Item 301, Item 3.A specifies the information that must be included in the selected financial data and provides that EGCs are not required to present selected financial data for any period prior to the earliest audited financial statements presented in connection with the registrant's initial public offering of its common equity securities. In a registration statement, periodic report, or other report filed under the Exchange Act, an EGC need not present selected financial data for any period prior to the earliest audited financial statements presented in connection with the EGC's first registration statement that became effective under the Exchange Act or the Securities Act.
Given the similarities between Item 3.A and Item 301, we propose to delete Item 3.A and the related instructions. As with Item 301, trend disclosure elicited by Item 3.A typically would be discussed in disclosure provided in response to Item 5 of Form 20-F, which requires MD&A disclosure similar to Item 303. FPIs may, however, continue to include a tabular presentation of the line items discussed in the MD&A, to the extent they believe that such a presentation would be useful to an understanding of the disclosure.
59. Should we eliminate Item 3.A of Form 20-F, as proposed? Would the proposed elimination of Item 3.A result in the loss of material information that is otherwise not available to investors? If so, what information would be lost, and are there alternatives we should consider that would elicit this information?
60. The Commission revised Form 20-F in 1999 to conform in large part to the international disclosure standards endorsed by the International Organization of Securities Commissions (“IOSCO”) for the non-financial statement portions of a disclosure document, which have served as the basis for the disclosure requirements in several foreign jurisdictions.
61. Would the proposed amendments conflict with home-country requirements in some jurisdictions if the FPI were engaging in a cross-border offering or listing? If so, please explain.
62. Unlike Item 301, Item 3.A provides an accommodation to FPIs for either or both of the earliest two years of data. Given this accommodation, should we retain this item? Does Item 3.A require disclosure that is duplicative of the financial statements?
63. Are there any unique considerations with respect to FPIs in this context?
64. Are the requirements of Item 5 of Form 20-F sufficient to provide investors with necessary disclosure of trends in a registrant's results of operations and financial condition? If we eliminate Item 3.A as proposed, should we amend Item 5 of Form 20-F to explicitly require a tabular presentation of line items discussed in the disclosure?
65. What are the costs to FPIs of providing required selected financial data?
66. How do market participants use the selected financial data disclosures provided by FPIs? Do market participants rely on any time segment of data more than others (
The disclosure requirements for Item 5 of Form 20-F (Operating and Financial Review and Prospects) are substantively comparable to the MD&A requirements under Item 303 of Regulation S-K.
Some of our proposals would amend Item 5 of Form 20-F to incorporate portions of both current and proposed Item 303. Specifically, we are proposing to incorporate portions of current Instructions 1 and 3 to Item 303(a) that specify the purpose of MD&A, into the forepart of Item 5 of Form 20-F to highlight the item's objective. Our proposals would revise Item 5 to state that the discussion must:
• Include other statistical data that will enhance a reader's understanding of the company's financial condition, changes in financial condition, and results of operations; and
• Focus specifically on material events and uncertainties known to management that would cause reported financial information not to be necessarily indicative of future operating results or future financial condition.
We are also proposing to codify into the forepart of Item 5 Commission guidance that states that a registrant should provide a narrative explanation of its financial statements that enables investors to see a registrant “through the eyes of management.”
For the reasons discussed above, we are proposing to:
• Revise Item 5 to specify that the discussion must include a quantitative and qualitative description of the reasons underlying material changes, including where material changes within a line item offset one another;
• Revise the liquidity and capital resources requirement in Item 5.B to specify that a registrant must broadly disclose material cash commitments, including but not limited to capital expenditures;
• Replace Item 5.E, which covers off-balance sheet arrangements, with a principles-based instruction;
IFRS now requires the following disclosures that substantially overlap with the requirements of Item 5.E. of Form 20-F: The nature and amount of a guarantee (
We believe our proposed amendments to Item 5.E of Form 20-F are consistent with the statutory mandate in Section 13(j) of the Exchange Act for the same reasons discussed above in Section II.C.6.
• Eliminate Item 5.F., which covers tabular disclosure of contractual obligations;
We are also proposing to delete the Instructions to Item 5.E and 5.F.
• Eliminate Item 5.G, which acknowledges application of the statutory safe harbor and specifically and exclusively applies to Item 5.E and Item 5.F.
Consistent with our proposal to amend Item 303 above, we are also proposing to revise Item 5 to explicitly require disclosure of critical accounting estimates.
We are also proposing a change to the requirement in Form 20-F that requires disclosure of inflation for FPIs.
• Amend Item 5.D of Form 20-F, which requires FPIs to identify “the most significant recent trends,” to instead, require disclosure of “material trends,” consistent with Item 303 and MD&A's focus on materiality;
• Amend Instruction 1 to Item 5, which currently references only the 1989 MD&A Interpretive Release, to add the 2002 Commission Statement, 2003 MD&A Interpretive Release, 2010 MD&A Interpretive Release
These and all of our proposals to Item 5 of Form 20-F are consistent with our policy of having the existing MD&A requirements for FPIs mirror the substantive MD&A requirements in Item 303.
67. Should we amend Item 5 of Form 20-F as proposed?
68. Would the proposed deletions in Item 5 result in the loss of material information that is otherwise not available to investors? If so, what information would be lost, and are there alternatives we should consider that would elicit this information?
69. Would the proposed additions to Item 5 create burdens for companies?
70. If we revise Item 5 of Form 20-F as proposed, would such revision reduce the ability of FPIs to use a single document in multiple jurisdictions?
71. Would the proposed amendments conflict with home-country requirements in some jurisdictions? If so, please explain.
72. Are there any unique considerations with respect to FPIs in the context of MD&A and Item 5 disclosures?
Form 40-F generally permits eligible Canadian FPIs to use Canadian disclosure documents to satisfy the Commission's registration and disclosure requirements. As a result, the MD&A contained in Form 40-F is largely prepared in accordance with Canadian disclosure standards. General Instructions B.(11) and B.(12), however, were added when the Commission adopted the off-balance sheet arrangements and contractual obligations disclosure requirements.
73. Should we amend Form 40-F, as proposed?
74. Would replacing General Instruction B.(11) of Form 40-F with a more principles-based instruction result in the loss of material information that is otherwise not available to investors? If so, what information would be lost, and are there alternatives we should consider that would elicit this information?
75. Would the proposed deletion of General Instruction B.(12) of Form 40-F result in the loss of material information that is otherwise not available to investors? If so, what information would be lost, and are there alternatives we should consider that would elicit this information?
76. If we eliminate General Instruction B.(13) of Form 40-F, is it necessary or helpful to provide a specific instruction referring to the statutory safe harbors for forward-looking statements that may apply to the proposed off-balance sheet arrangement disclosures? Should we instead retain General Instruction B.(13) of Form 40-F and acknowledge that the statutory safe harbors would apply?
77. Are there any unique considerations with respect to eligible Canadian FPIs in this context?
FPIs may voluntarily choose to file on forms that would require disclosure under Item 303. Current Instruction 11 to Item 303 requires “foreign private registrants” to discuss briefly any pertinent governmental economic, fiscal, monetary, or political policies or factors that have materially affected or could materially affect, directly or indirectly, their operations or investments by United States nationals.
For consistency with the requirements of Form 20-F,
78. Should we retain and amend the FPI instruction to Item 303, as proposed?
We propose additional conforming amendments that are consistent with the proposed amendments described above.
We propose to delete references to Items 301 and 302 in Item 914(a) of Regulation S-K. This item applies to roll-up transactions, which generally involve the combination or reorganization of one or more partnerships, directly or indirectly, where some or all of the investors in any such partnerships will receive new securities, or securities in another entity.
In the context of Item 914(a), disclosure provided under Items 301 and 302 would not be duplicative of the financial statements and would otherwise be unavailable. However, Item 914(a) specifies disclosure of other financial information
79. If we eliminate Items 301 and 302 should we also delete these references in Item 914(a) and not specify additional disclosure requirements, as proposed? Are there any unique considerations for roll-up transactions that would necessitate some or all of the information required by Items 301 and 302?
Item 1112 of Regulation AB requires disclosure of financial information required by Item 301 or Item 3.A of Form 20-F about significant obligors of pool assets if the pool assets relating to the significant obligor represent 10% or more, but less than 20%, of the asset pool in an asset-backed securities (“ABS”) transaction. Similarly, Items 1114 and 1115 of Regulation AB require disclosure of financial information required by Item 301 or Item 3.A of Form 20-F about credit enhancement providers and derivatives counterparties, respectively, whose support represents a similar level of concentration in an ABS transaction. With our proposal to eliminate Item 301 and Item 3.A of Form 20-F for corporate issuers, financial information about these third parties to an ABS transaction, including any trend information comparable to information required by Item 303 or Item 5 of Form 20-F, may not otherwise be available. Therefore, we propose to replace in Regulation AB those requirements to disclose selected financial data under Item 301 or Item 3.A of Form 20-F with requirements to disclose summarized financial information, as defined by Rule 1-02(bb) of Regulation S-X,
80. If we eliminate Item 301 and Item 3.A of Form 20-F, should we replace these references in Items 1112, 1114, and 1115 of Regulation AB with a reference to Rule 1-02(bb) of Regulation S-X, as proposed? Would the potential fewer earlier periods being presented under these items result in the loss of material information? Are there alternatives that we should consider? Should we explicitly require a tabular presentation of the summarized financial information for ABS?
We are proposing to replace references to Item 301 and Item 3.A of Form 20-F in Form S-1 and Form F-1, respectively, with Rule 1-02(bb) of Regulation S-X, where these forms provide for use of a summary prospectus under Rule 431.
81. If we eliminate Item 301 and Item 3.A of Form 20-F, as proposed, should we replace these references in the Instructions as to Summary Prospectuses of Forms S-1 and F-1 with Item 1-02(bb) of Regulation S-X, as proposed?
We are proposing to eliminate references to Items 301 and 302 in Form S-4, Form F-4, and Schedule 14A. Where these forms are used in conjunction with a business combination, pro forma financial statements for the most recent fiscal year and interim period under Article 11 of Regulation S-X are required.
Similarly, we are proposing to eliminate references to Item 301 and Item 3.A of Form 20-F in Item 17(b)(3) of both Form S-4 and Form F-4. We are also proposing to delete the reference to Item 302 in Item 17(b)(4) of Form S-4. Because Item 17(b) of Forms S-4 and F-4 applies to non-reporting target companies in a business combination, this disclosure may not be available elsewhere. We believe, however, consistent with the discussion above,
82. If we eliminate Item 301 and Item 3.A of Form 20-F as proposed, should we also eliminate references to these items in Form S-4 and F-4 and Schedule 14A, as proposed? Are there any unique considerations in the context of a business combination?
83. In Forms S-4 and F-4, pro forma information of selected financial data is required as part of the prospectus summary. Are there any unique considerations in the context of a business combination such that Item 301 and Item 3.A of Form 20-F pro forma information should be required as part of the prospectus summary?
84. Should we eliminate the requirement to provide Item 301, Item 3.A of Form 20-F, and Item 302 disclosure in Forms S-4 and F-4 for non-reporting target companies, as proposed?
We are proposing a conforming change to Form S-20 to remove references to Item 302 of Regulation S-K.
85. If we eliminate Item 302, should we also eliminate reference to this item in Form S-20? Are there any unique considerations in the context of Form S-20?
We propose to provide a transition period after the publication of a final rule in the
86. Is the proposed transition period necessary and appropriate? If not, what time period would be necessary for registrants to comply with the proposed amendments?
87. Would certain proposed amendments (
We request and encourage any interested person to submit comments on any aspect of our proposals, other matters that might have an impact on the proposed amendments, and any suggestions for additional changes. With respect to any comments, we note that they are of greatest assistance to our rulemaking initiative if accompanied by supporting data and analysis of the issues addressed in those comments and by alternatives to our proposals where appropriate.
As discussed above, we are proposing amendments to modernize, simplify, and enhance certain financial disclosure requirements in Regulation S-K. Specifically, we are proposing (1) to eliminate Item 301 of Regulation S-K, Selected Financial Data, and Item 302 of Regulation S-K, Supplementary Financial Information; and (2) to amend Item 303 of Regulation S-K, Management's Discussion & Analysis of Financial Condition and Results of Operations. The proposed amendments are intended to eliminate duplicative disclosures and enhance MD&A disclosures for the benefit of investors, while simplifying compliance efforts for registrants.
Overall, investors and registrants may benefit from the proposed amendments if they would help avoid duplicative disclosure and if emphasizing the current principles-based approach to MD&A results in more tailored disclosures that allow investors to better understand the registrant's business through the eyes of management. We acknowledge the risk that emphasizing the current principles-based approach may result in certain loss of information to investors. However, we believe that any loss of information would be limited because the proposed eliminations are mostly duplicative. Additionally, under the proposed principles-based approach, registrants would still be required to provide disclosure about these topics if they are material to an investment decision, further mitigating the potential loss of information.
We are mindful of the costs and benefits of the proposed amendments. The discussion below addresses the potential economic effects of the proposed amendments, including the likely benefits and costs, as well as the likely effects on efficiency, competition, and capital formation.
The current disclosure requirements under Items 301, 302, and 303 of Regulation S-K, and the related requirements under Items 3.A and 5 of Form 20-F, and General Instructions B.(11), (12), and (13) of Form 40-F, together with the current disclosure practices registrants have adopted to comply with these requirements, form the baseline from which we estimate the likely economic effects of the proposed amendments.
The proposed amendments may affect both domestic registrants and FPIs.
In this section, we discuss the anticipated economic benefits and costs of the proposed amendments. We first analyze the overall economic effects of the proposed amendments. We then discuss the potential benefits and costs of specific proposed amendments.
We anticipate the proposed amendments
We believe investors could also benefit from the proposed amendments. First, proposed amendments that clarify and codify existing guidance, such as the proposed amendments related to critical accounting estimates and capital resources, could enhance MD&A disclosure. More robust and informative disclosure on these topics could facilitate investors' decision making and enhance investor protection. Second, if the proposed amendments result in more enhanced and principles-based disclosure, they could allow investors to more efficiently process the disclosure and make better-informed investment decisions. In particular, investors may benefit from more tailored disclosures that allow them to better understand the registrant's business through the eyes of management. Investors also could benefit from the reduction of duplicative disclosure, because reducing such duplication may improve the readability and conciseness of the information provided, help investors focus on material information, and facilitate more efficient information processing.
However, investors could incur certain costs under the proposed amendments. For example, investors who are used to the current disclosure format might experience costs when adjusting to the new format. However, this cost should decrease over time. Investors could also incur monetary costs such as database subscriptions, or opportunity costs such as time spent, if they need to obtain or reconstruct information through alternative sources. However, we do not expect such costs to be significant since registrants would still need to disclose material information. There could be certain additional costs associated with the proposed amendments to the extent that they result in the elimination of disclosure material to an investment decision if registrants misjudge what information is material, or if disclosure becomes less comparable across firms.
Some of the costs of the proposed amendments could be mitigated by external disciplining mechanisms, such as the Commission staff's filing review program. In general, registrants would remain subject to the antifraud provisions of the securities laws.
The proposed amendments likely would affect registrants and investors differently. For example, any compliance cost reduction might be more beneficial to smaller registrants that are financially constrained. Similarly, although eliminating information that is not material should benefit all investors, retail investors could benefit more as they are less likely to have the time and resources to devote to reviewing and evaluating disclosure. On the other hand, retail investors could also incur additional costs as a result of the proposed amendments because they may need to obtain information from alternative sources, which could involve monetary costs, such as database subscriptions, or opportunity costs, such as time spent searching for alternative sources. These costs may be higher for retail investors than for institutional investors.
We expect the proposed amendments would result in costs and benefits to registrants and investors, and we discuss those costs and benefits item by item in this section. The proposed changes to each item would impact the compliance burden for registrants in filing forms that require disclosures that are responsive to such items. Overall, we expect the net effect of the proposed amendments on a registrant's compliance burden to be limited. As explained in this section, we expect certain aspects of the proposed amendments to increase compliance burdens, and others to decrease the burdens. The quantitative estimates of changes in those burdens for purposes of the Paperwork Reduction Act of 1995 (“PRA”)
Item 301 requires certain registrants
The current disclosure requirement under Item 301 could result in duplicative disclosure, and it can be costly for registrants to provide such disclosures under certain circumstances. For example, as discussed above, providing disclosure of the earliest two years often creates challenges for registrants when such information has not been previously provided.
To the extent the proposed amendments result in the elimination of disclosure that is not material, investors may benefit. In particular, if the readability and conciseness of the information provided improves,
Investors may incur costs to the extent the proposed amendments result in a loss of information. While we do not anticipate significant information loss from the elimination of Item 301, we recognize that selected financial information for the two earliest years would no longer be disclosed in non-EGC IPOs. However, the purpose of the item is to highlight certain significant
Elimination of Item 301 would affect the financial information disclosure by ABS issuers. As discussed above, the currently available financial information set forth in Item 301 or Item 3.A of Form 20-F about significant obligors of pool assets, credit enhancement providers, and derivatives counterparties as required by Item 1112, Items 1114, and 1115 of Regulation AB may not otherwise be available. To mitigate this potential information loss, we propose to replace in Regulation AB those requirements to disclose selected financial data under Item 301 or Item 3.A of Form 20-F with requirements to disclose summarized financial information, as defined by Rule 1-02(bb) of Regulation S-X, for each of the last three fiscal years (or the life of the relevant entity or group of entities, if less).
Since the proposed changes related to ABS issuers are intended to conform to the other changes related to selected financial data and MD&A, our analysis of the costs and benefits for registrants and their investors under the proposed amendments to Item 301 and Item 3.A of Form 20-F can be carried over to ABS issuers. While this proposal would generally result in fewer periods being presented, we do not expect it to have a significant effect on ABS issuers and their investors, because the disclosure of the earlier years would cover periods beyond those presented for the underlying pool assets to which the third-party financial information would relate.
Under Item 302(a), certain registrants are required to disclose quarterly financial data of specified operating results and variances in these results from amounts previously reported on a Form 10-Q.
Since the financial data required under this item (including disclosure related to the effect of any discontinued operations and unusual or infrequently occurring items), other than fourth-quarter data, typically can be found in prior quarterly filings through EDGAR, the prescriptive disclosure requirements under existing Item 302(a) result in duplicative disclosures. By eliminating the duplicative disclosure and associated compliance costs, the proposed amendments would benefit registrants. We do not expect the proposed elimination of Item 302(a) to affect registrants negatively. While a decrease in disclosure could potentially increase the company's cost of capital in general, registrants can always choose to disclose the quarterly financial information through other channels, such as an earnings release.
Investors could benefit to the extent that the proposed amendments result in less duplicative disclosure and less disclosure of immaterial information. The proposed amendments may result in improved readability and conciseness of the information provided, help investors focus on material information, and facilitate more efficient information processing by investors. The proposed amendments would also allow registrants to present financial information that is more reflective of their own industry and firm operating cycles, which could allow investors to better understand their business.
We anticipate information loss from the proposed elimination of fourth quarter financial information currently required under Item 302(a), which is otherwise not explicitly required to be disclosed. Though fourth quarter financial data could be calculated from annual report and cumulative third quarter data, it may be costly for investors to calculate or obtain. While such costs might be minimal for institutional investors, which have both resources and sophistication to obtain the needed financial information, for retail investors, the search costs might be substantially larger, which could involve monetary costs such as database subscriptions, or opportunity costs such as time spent searching for alternative sources and cross-referencing. Additionally, investors could make mistakes in deriving the fourth quarter financial information. Finally, in the case of a restatement, investors, including more sophisticated institutional investors, might not be able to accurately back out the fourth quarter information. To the extent that there is lack of accurate fourth quarter information which cannot be obtained through alternative means, investors' decision making could be affected.
However, the potential information loss from the elimination of Item 302(a) might be mitigated under MD&A's principles-based framework. We believe that fourth quarter data may not be material to all registrants or in every fiscal year. For example, for investors in companies with long operating cycles, fourth quarter data might not be as incrementally important as annual data. However, to the extent that there are material trends or events in the fourth quarter or throughout the fiscal year, registrants would be required to address those matters in their MD&A.
Item 302(b) requires issuers engaged in oil and gas producing activities, other than SRCs, to disclose information about those activities that is required by U.S. GAAP for each period presented. The FASB has recently proposed to amend U.S. GAAP to require the incremental disclosure called for by Item 302(b). Thus, because the disclosure required by Item 302(b) would be included in the notes to the registrant's financial statements, the proposed elimination of Item 302(b) would remove duplicative disclosure on this topic, benefiting both registrants and investors. Registrants could benefit from the reduced compliance burden. Investors should not face information loss from this aspect of the proposed amendments, as this requirement completely overlaps with the proposed amendments to U.S. GAAP. However, investors may incur costs to adjust to the new disclosure format. Such costs are likely to be one-time costs or to decrease over time.
The proposal includes multiple changes that are intended to clarify and streamline the requirements of Item 303. For example, we are proposing a new Item 303(a) to provide a succinct and clear description of the purpose of MD&A. As discussed above, emphasizing the purpose of MD&A at the outset of the item is intended to provide clarity and focus to registrants as they consider what information to discuss and analyze, which could
We anticipate that the proposed amendments would provide registrants with more clarity on disclosure requirements. When there is confusion related to disclosure requirements, registrants may either over-disclose and incur additional compliance costs, or under-disclose and face increased litigation risk. To the extent that the proposed amendments reduce registrants' confusion, registrants could potentially benefit from reduced compliance costs and litigation risk. More informative disclosure could potentially benefit both registrants and investors by reducing information asymmetry in the market. Reduced information asymmetry could help investors make more informed investment decisions, which may benefit registrants in their capital raising. For registrants, reduced information asymmetry could also potentially improve firm liquidity and reduce cost of capital.
Item 303(a)(2), which requires a registrant to discuss its material commitments for capital expenditures as of the end of the latest fiscal period, does not define the term “capital resources.” The lack of specificity was intended to provide management flexibility for a meaningful discussion when this disclosure requirement was adopted in 1980. Nonetheless, the Commission has previously provided guidance to clarify the nature of this requirement.
We believe that the proposed amendments could benefit registrants by providing additional clarity on the term “capital resources” and reducing confusion, thereby eliciting appropriate disclosure from registrants and potentially decreasing litigation risk. Capital expenditures vary across industries. While firms in traditional industries rely more on physical assets, firms in other industries such as the technology sector may invest more heavily in intellectual property and human capital. Specifying only capital expenditures in the rule could lead to confusion about what information should be provided. As a result, registrants may over-disclose and incur additional compliance costs, or under-disclose and face increased litigation risk. Further, we expect that registrants would benefit from decreased compliance costs to the extent that the proposed amendments reduce the need to consult existing Commission guidance to process and understand the disclosure requirements.
The proposed amendments should also benefit investors through improved disclosure. As discussed above, lack of clarity might lead to under- or over-disclosure by registrants. For example, disclosure focusing only on capital expenditures rather than on material cash commitments more generally might lead to under-disclosure for less capital intensive industries. As a result, investors might not receive adequate or consistent information to make informed investment decisions. By providing clarity on the requirement, the proposed amendments may facilitate more informative disclosure.
The proposed amendments might increase the disclosure burden for some registrants because they may prompt disclosure of material investments in non-physical assets that registrants might not otherwise be disclosing. However, we do not anticipate a significant increase in compliance costs. As discussed above, some registrants already include disclosure beyond capital expenditures, which the Commission's MD&A guidance has encouraged.
Item 303(a)(3)(ii) requires a registrant to describe any known trends or uncertainties that have had or that the registrant expects will have a material impact (favorable or unfavorable) on net sales or revenues or income from continuing operations. The proposed amendments clarify that when a registrant knows of events that are reasonably likely to cause a material change in the relationship between costs and revenues, such as known or reasonably likely future increases in costs of labor or materials or price increases or inventory adjustments, the reasonably likely change must be disclosed. This proposed amendment would conform the language in this paragraph to other Item 303 disclosure requirements for known trends and align Item 303(a)(3)(ii) with the Commission's guidance on forward-looking disclosure.
As discussed above, the language in the existing Item 303(a)(3)(ii) differs from other Item 303 disclosure requirements for forward-looking information.
Some registrants may experience an increased cost of compliance under the proposed amendments to the extent that these registrants have been disclosing events that
Item 303(a)(3)(iii) currently requires management to discuss certain factors, such as changes in prices or volume, that led to certain material increases in net sales or revenues. The proposed amendments broaden the current requirement focusing on “material increases in net sales or revenue” in the “financial statements” to instead require disclosure of “material changes from period to period in one more line items” in the “statement of comprehensive income.” Additionally, the proposed amendments would amend Item 303(a)(3)(iii) to require disclosure specifying the
The proposed amendments are intended to codify Commission guidance on results of operations disclosure. The Commission has previously stated that MD&A disclosure should include both qualitative and quantitative analysis and clarified that a results of operations discussion should describe increases or decreases in any line item, including net sales or revenues.
The proposed amendments could increase disclosure burdens for registrants, thus potentially increasing compliance costs. However, since many registrants may already be following relevant Commission guidance, the marginal increase in compliance costs is not expected to be significant. Additionally, to the extent that registrants do incur additional compliance costs, such costs could be offset by the potential decrease in cost of capital as a result of increased disclosure and reduced information asymmetry.
The proposed amendments would require registrants to provide a nuanced discussion of the underlying reasons that may be contributing to material changes in line items, and therefore should enhance the disclosure. More consistent and informative disclosure would allow investors to make more meaningful comparisons across firms and make more informed investment decisions. However, any potential benefits to investors may be limited to the extent registrants already are following the relevant Commission guidance.
We propose to eliminate Item 303(a)(3)(iv) and related Instructions 8 and 9, which generally require that registrants specifically discuss the impact of inflation and price changes on their net sales, revenue, and income from operations for the three most recent fiscal years, to the extent material. The purpose of the proposed elimination is to streamline Item 303 by eliminating the specific reference to these topics, which may not be material to most registrants. This proposed change is consistent with the principles-based disclosure framework of Item 303.
We do not believe that these proposed changes would result in a loss of material information for market participants. Registrants would still be required to discuss in their MD&A the impact of inflation and changing prices, if material.
The proposed elimination of this item could benefit registrants by streamlining Item 303 and reducing compliance costs. Similar to what we have discussed above,
Current Item 303(a)(4) requires, in a separately-captioned section, disclosure of a registrant's off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on a registrant's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors. We propose to replace Item 303(a)(4) with a new principles-based instruction that would require registrants to discuss commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have, or are reasonably likely to have, a material current or future effect on a registrant's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements, or capital resources.
We do not believe the proposed amendments would lead to significant information loss, as we expect the proposed principles-based instruction would continue to elicit material information about off-balance sheet arrangements. As discussed above, we believe that the proposed amendments would encourage registrants to consider
The proposed amendments could benefit registrants by avoiding duplicative disclosure and reducing compliance costs. As discussed above, to the extent the proposed amendments improve the readability and conciseness of the information provided, they may help investors process information more effectively. Also, emphasizing a principles-based approach may encourage registrants to provide disclosure that is tailored and informative, which could be more beneficial to investors.
Investors might need to spend time searching for the information and adjusting to the new format and location of the disclosure as the proposal would no longer require the relevant disclosure in a separately captioned section. Such costs are likely to be one-time or decrease over time.
Under existing Item 303(a)(5), registrants other than SRCs must disclose in tabular format their known contractual obligations. There is no materiality threshold for this item. A registrant must arrange its chart to disclose the aggregate amount of contractual obligations by type and with subtotals by four prescribed periods. The Commission adopted this requirement so that aggregated information about contractual obligations was presented in one place.
We believe the proposal could lead to reduced compliance costs by avoiding duplicative disclosure, therefore benefiting registrants. On the other hand, we also recognize that there might be increased costs associated with assessing the materiality of contractual obligations under the proposed principles-based approach. However we do not expect such costs to be significant given that the materiality standard is already used by registrants when preparing MD&A disclosures. As discussed above, to the extent the elimination of redundant or immaterial disclosure improves the readability and conciseness of the information provided, the proposed amendment could potentially benefit investors, because it may help them process information more effectively by focusing on material information. Also, since a principles-based approach allows registrants to present more tailored information, it could lead to more informative disclosure, which would benefit investors.
We recognize that there could be a loss of certain information due to the proposed elimination of the item. As discussed in Section II.C.7, some of the information in the contractual obligations table such as purchase obligations is not specifically called for under U.S. GAAP. Additionally, information related to the “payments due by period” currently required by the item may be difficult to ascertain from a registrant's financial statements. However, since the proposed amendments to capital resources disclosure would encompass material contractual obligations, we believe any loss of information would not be significant.
We expect investors could experience certain additional costs. A centralized location and tabular format make it convenient for investors to extract and analyze information. Under the proposed amendments, the absence of a centralized location and tabular format may cause investors to incur search costs to derive the data from the financial statements, or monetary costs to obtain the information through alternative channels, such as database subscriptions. Investors may also incur opportunity costs, such as time spent searching for alternative sources, and these costs may fall more heavily on retail investors than on other types of investors, such as institutional investors.
Item 303(a) does not currently include a subsection requiring registrants to disclose critical accounting estimates. U.S. GAAP also does not require similar disclosure of estimates and assumptions in the notes to financial statements, except in limited circumstances. However, IFRS requires disclosures regarding sources of estimation uncertainty and judgments made in the process of applying accounting policies that have the most significant effect on the amounts recognized in the financial statements.
As discussed above, commenters have suggested that there is confusion as to how and whether to disclose critical accounting estimates, resulting in inconsistent disclosure practice among registrants. As noted above, many registrants simply repeat the discussion of significant accounting policies from the notes to the financial statements in their MD&A, which is duplicative and may not be particularly informative to investors. Providing a clear disclosure framework could benefit registrants by reducing confusion and duplicative disclosure, thereby decreasing compliance costs.
Investors would also likely benefit from the proposed amendments. The proposed amendments could elicit more informative disclosure from registrants related to their estimates and assumptions, which would help investors better understand any potential risk or uncertainty related to these estimates and make more informed investment decisions. The proposed amendments could also promote more consistent disclosure practices among registrants by providing more clarity, allowing investors to make more meaningful comparisons across registrants and better informed investment decisions.
We recognize that the proposed disclosure requirement could introduce additional costs to market participants. While we do not anticipate that investors would incur any direct costs (other than information processing costs) associated with this proposal, compliance costs might increase for registrants because of the proposed more prescriptive disclosure compared to the existing more principles-based approach. However, the potential increase in compliance costs might decline over time as registrants become more accustomed to the new filing requirements. We also note that,
Item 303(b) requires registrants to provide MD&A disclosure for interim periods that enables market participants to assess material changes in financial condition and results of operations between certain specified periods. The proposal would amend current Item 303(b) to allow for flexibility in comparisons of interim periods and to streamline the item. Specifically, under the proposed Item 303(c), registrants would be allowed to compare their most recently completed quarter to either the corresponding quarter of the prior year (as is currently required) or to the immediately preceding quarter. The proposed amendments would also streamline the instructions to current Item 303(b), consistent with the proposed amendments to current Item 303(a) and the related instructions.
This more flexible approach is intended to allow registrants to provide analysis that is better tailored to their business cycles. This may result in more informative disclosure that could reduce information asymmetry and firms' cost of capital, benefiting registrants.
Investors also may benefit from the proposed amendments. As noted above, the proposed amendments would provide registrants flexibility to choose the interim period presented, which could allow them to provide a more tailored analysis. This, in turn, could allow investors to make better informed investment decisions. On the other hand, more flexibility in disclosure could also decrease comparability across firms, potentially increasing the cost of investors' decision-making. However, we do not expect the flexibility in reporting to significantly reduce comparability, since registrants in the same industry may be likely to have similar business cycles and choose similar interim periods. Therefore, the concern about a reduction of comparability across firms in the same industry could be mitigated. Streamlining this item is potentially beneficial to investors, as the resultant reduction of duplicative disclosure might increase the effectiveness of information processing by investors, thus helping them make more informed decisions.
Item 303(c)
Item 303(d)
The proposed changes related to Item 3.A and Item 5 of Form 20-F and General Instructions B.(11), (12), and (13) of Form 40-F for FPIs are intended to conform to the other changes related to selected financial data and MD&A. Therefore, our analysis of the costs and benefits for domestic issuers and their investors under the proposed amendments to Item 301 can be carried over to FPIs and their investors under the amended items. The proposed changes could benefit FPIs through a reduction in compliance costs, although the benefits are likely to be smaller given that current Item 3.A permits a FPI to omit either or both of the earliest two years of data under certain conditions and registrants that file on Form 40-F use Canadian disclosure documents to satisfy the Commission's registration and disclosure requirements. Since FPIs would have more flexibility to provide information that is better tailored to their industry or country, investors could benefit from more informative disclosure. However, investors might incur additional search costs when looking for information through alternative channels.
To maintain a consistent approach to MD&A for domestic registrants and FPIs, we are proposing changes to Forms 20-F and 40-F that generally conform to our proposed amendments to Item 303. Therefore, our discussion of the costs and benefits for domestic issuers and their investors under the proposed amendments to Item 303 generally can be carried over to FPIs under the amended item. The proposal adds to Item 303 the current Form 20-F instruction that requires FPIs that are not subject to the multijurisdictional disclosure system to discuss hyperinflation in a hyperinflationary economy. This disclosure can be important to investors when analyzing FPIs, as hyperinflation in some FPIs' home countries might be an important risk factor for the firm's results of operations or financial health.
We believe the proposed amendments could have positive effects on efficiency, competition, and capital formation. As discussed above, we expect the proposed amendments could reduce duplicative disclosure and elicit disclosure that is more focused on material information and tailored to a
However, as discussed above, since registrants no longer need to present certain information (
The proposed amendments, in particular by simplifying and codifying certain positions expressed in various Commission guidance, might reduce the compliance costs of private companies considering going public and this cost reduction may be more significant for SRCs. For companies considering an IPO, the benefit of easing the burdens associated with preparing these disclosures for the first time could decrease the costs of going public and thus leave more capital for future investment. This could lead to more efficient capital formation.
As an alternative to the proposed elimination of Item 301, which requires registrants to furnish selected financial data in comparative tabular form for each of the registrant's last five fiscal years, we considered amending the item to require only the same number of years of data as presented in the registrant's financial statements in that same filing. Similarly, another alternative we considered is expanding the current EGC accommodation to all initial registrants. The EGC accommodation generally provides that an EGC need not present selected financial data for any period prior to the earliest audited period presented in its initial filing.
The benefit of these alternatives would be potential cost savings from a reduction in compliance burdens by not having to reproduce the earliest years of selected financial data. These alternatives might be sufficient for investors to make a quick comparison with the most recent financial data without cross-referencing to other sources. However, given the nature of electronic access to financial data through EDGAR, we think the potential benefits of these alternatives would be more limited than the proposed elimination of Item 301. We decided not to propose the alternative of requiring the same number of years of data as presented in the registrant's financial statements in that same filing because such disclosure would be largely duplicative and therefore, have limited utility. Regarding the alternative that we expand the current EGC accommodation to all initial registrants, while this approach could provide cost savings to non-EGC initial registrants at the beginning, in the long run, these registrants would still face the same duplicative disclosure problem that other registrants do currently. As a result, we decided not to propose this alternative.
As another alternative, we considered amending Item 301 to require the earliest years only in circumstances where the company can represent that the information cannot be provided without unreasonable effort and expense, as is currently allowed under Item 3.A of Form 20-F. For example, as a commenter noted, there are several situations where such disclosure can be costly.
As an alternative to the proposed elimination of Item 302, which requires disclosure of quarterly financial data of selected operating results and variances in these results from amounts previously reported on a Form 10-Q, we considered requiring a registrant to separately disclose fourth quarter data elsewhere in its annual report, such as in MD&A. This approach could prevent or mitigate the potential loss of the fourth quarter financial data under the proposed approach. We decided not to propose this alternative because the fourth quarter information may not be material or significant to investors in all circumstances. Therefore, separate presentation of the fourth quarter information might not justify its cost.
We are proposing to amend current Item 303(a)(2) to specify that a registrant should broadly disclose material cash commitments, including but not limited to capital expenditures. We considered proposing a definition for the term “capital resources.” While defining the term could provide more clarity for registrants, it would also result in a disclosure requirement more prescriptive in nature, inconsistent with our current objective to promote the principles-based nature of MD&A. We therefore decided not to propose this alternative.
As an alternative to the proposed elimination of Item 303(a)(5), which requires registrants to disclose in tabular format contractual obligations by type of obligation, overall payments due and prescribed periods, we considered maintaining the contractual obligations disclosure requirement in a modified form. For example, we considered allowing this disclosure in a non-tabular format. While this approach could prevent any potential information loss, the non-tabular presentation of information may not be as clear as the tabular format. Also, this approach may not generate meaningful savings for registrants through reduced compliance costs. Another alternative we considered was to reduce the prescribed time periods that need to be disclosed. For example, we could require disclosures of only short-term or long-
As an alternative to proposed Item 303(b)(4), we considered issuing additional guidance on critical accounting estimates that enhances the guidance issued in the 2003 MD&A Release. While this alternative could save compliance costs for registrants because it would not create a new requirement, the savings might not necessarily be significant, given the existing Commission guidance on this topic. Further, we believe that by codifying existing guidance, proposed Item 303(b)(4) would provide investors with more enhanced disclosure and protection by ensuring that companies consistently provide such disclosure. Therefore, we decided not to propose this alternative.
Proposed Item 303(b) would allow flexibility for registrants to compare their most recently completed quarter to either the corresponding quarter of the prior year (as is currently required) or to the immediately preceding quarter. As an alternative, we considered an approach under which registrants would be required to compare the most recent quarter to both the corresponding quarter of the prior year and the immediately preceding quarter. While this alternative approach would provide investors with more disclosure, it might not be clear to investors which time period is more representative of the registrant's business, and registrants would incur more compliance costs. Also, this alternative is less consistent with the principles-based nature of MD&A. Therefore, we decided not to propose this alternative.
The proposed amendments do not require registrants to structure financial disclosures in a machine-readable format. An alternative suggested by some commenters
We request comment on all aspects of our economic analysis, including the potential costs and benefits of the proposed amendments and alternatives thereto, and whether the proposed amendments, if adopted, would promote efficiency, competition, and capital formation or have an impact on investor protection. In addition, we also seek comment on alternative approaches to the proposed amendments and the associated costs and benefits of these approaches. Commenters are requested to provide empirical data, estimation methodologies, and other factual support for their views, in particular, on costs and benefits estimates.
Specifically, we seek comment with respect to the following questions: Are there any costs and benefits to any entity that are not identified or misidentified in the above analysis? Are there any effects on efficiency, competition, and capital formation that are not identified or misidentified in the above analysis? Should we consider any of the alternative approaches outlined above instead of the proposed amendments? Which approach and why? Are there any other alternative approaches to improving MD&A disclosure that we should consider? If so, what are they and what would be the associated costs or benefits of these alternative approaches?
Certain provisions of our rules, schedules, and forms that would be affected by the proposed amendments contain “collection of information” requirements within the meaning of the PRA.
“Form 1-A” (OMB Control No. 3235-0286);
“Form 10” (OMB Control No. 3235-0064);
“Form 10-Q” (OMB Control No. 3235-0070);
“Form 10-K” (OMB Control No. 3235-0063);
“Schedule 14A” (OMB Control No. 3235-0059);
“Form 20-F” (OMB Control No. 3235-0288);
“Form 40-F” (OMB Control No. 3235-0381);
“Form F-1” (OMB Control No. 3235-0258);
“Form F-4” (OMB Control No. 3235-0325);
“Form N-2” (OMB Control No. 3235-0026);
“Form S-1” (OMB Control No. 3235-0065);
“Form S-4” (OMB Control No. 3235-0324);
“Form S-11” (OMB Control No. 3235-0067);
We adopted all of the existing regulations, schedules, and forms pursuant to the Securities Act, the Exchange Act, and/or the Investment Company Act. The regulations, schedules, and forms set forth the disclosure requirements for registration statements, periodic reports, and proxy and information statements filed by registrants to help investors make informed investment and voting decisions.
A description of the proposed amendments, including the need for the information and its proposed use, as well as a description of the likely respondents, can be found in Section II above, and a discussion of the economic effects of the proposed amendments can be found in Section IV above.
The following Table 1 summarizes the estimated effects of the proposed amendments on the paperwork burdens associated with the affected forms listed in Section V.A.
Below we estimate the incremental and aggregate reductions in paperwork burden as a result of the proposed amendments. These estimates represent the average burden for all registrants, both large and small. In deriving our estimates, we recognize that the burdens will likely vary among individual registrants based on a number of factors, including the nature of their business. We do not believe that the proposed amendments would change the frequency of responses to the existing collections of information; rather, we estimate that the proposed amendments would change only the burden per response.
The burden reduction estimates were calculated by multiplying the estimated number of responses by the estimated average amount of time it would take a registrant to prepare and review disclosure required under the proposed amendments. For purposes of the PRA, the burden is to be allocated between internal burden hours and outside professional costs. Table 2 below sets forth the percentage estimates we typically use for the burden allocation for each form. We also estimate that the average cost of retaining outside professionals is $400 per hour.
Table 3 below
The following Table 4 summarizes
Pursuant to 44 U.S.C. 3506(c)(2)(B), we request comment in order to:
• Evaluate whether the proposed collections of information are necessary for the proper performance of the functions of the Commission, including whether the information will have practical utility;
• Evaluate the accuracy and assumptions and estimates of the burden of the proposed collection of information;
• Determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected;
• Evaluate whether there are ways to minimize the burden of the collection of information on those who respond, including through the use of automated collection techniques or other forms of information technology; and
• Evaluate whether the proposed amendments would have any effects on any other collection of information not previously identified in this section.
Any member of the public may direct to us any comments concerning the accuracy of these burden estimates and any suggestions for reducing these burdens. Persons submitting comments on the collection of information requirements should direct their comments to the Office of Management and Budget, Attention: Desk Officer for the U.S. Securities and Exchange Commission, Office of Information and Regulatory Affairs, Washington, DC 20503, and send a copy to, Vanessa A. Countryman, Secretary, U.S. Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090, with reference to File No. S7-01-20. Requests for materials submitted to OMB by the Commission with regard to the collection of information should be
For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA),
• An annual effect on the U.S. economy of $100 million or more;
• A major increase in costs or prices for consumers or individual industries; or
• Significant adverse effects on competition, investment, or innovation.
We request comment on whether our proposal would be a “major rule” for purposes of the Small Business Regulatory Enforcement Fairness Act. In particular, we request comment on the potential effect on the U.S. economy on an annual basis; any potential increase in costs or prices for consumers or individual industries; and any potential effect on competition, investment, or innovation.
Commenters are requested to provide empirical data and other factual support for their views to the extent possible.
When an agency issues a rulemaking proposal, the Regulatory Flexibility Act (“RFA”)
The proposed amendments would have an impact on a substantial number of small entities.
We request comment on this certification. In particular, we solicit comment on the following: Do commenters agree with the certification? If not, please describe the nature of any impact of the proposed amendments on small entities and provide empirical data to illustrate the extent of the impact. Such comments will be considered in the preparation of the final rules (and in a Final Regulatory Flexibility Analysis if one is needed) and will be placed in the same public file as comments on the proposed rules themselves.
The amendments contained in this release are being proposed under the authority set forth in Sections 7, 10, 19(a), and 28 of the Securities Act of 1933, as amended, Sections 3(b), 12, 13, 14, 23(a), and 36 of the Securities Exchange Act of 1934, as amended, and Sections 8, 24, 30, and 38 of the Investment Company Act of 1940, as amended.
Accountants, Accounting, Banks, Banking, Employee benefit plans, Holding companies, Insurance companies, Investment companies, Oil and gas exploration, Reporting and recordkeeping requirements, Securities, Utilities.
Administrative practice and procedure, Reporting and recordkeeping requirements, Securities.
In accordance with the foregoing, we propose to amend Title 17, Chapter II of the Code of Federal Regulations as follows:
15 U.S.C. 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77aa(25), 77aa(26), 77nn(25), 77nn(26), 78c, 78j-1, 78
(bb) * * * (1) Except as provided in paragraph (bb)(2) of this section, summarized financial information referred to in this regulation shall mean the presentation of summarized information as to the assets, liabilities and results of operations of the entity for which the information is required. Summarized financial information shall include the following disclosures, which may be subject to appropriate variation to conform to the nature of the entity's business:
(2) Summarized financial information for unconsolidated subsidiaries and 50 percent or less owned persons referred to in and required by § 210.10-01(b) for interim periods shall include the information required by paragraph (bb)(1)(ii) of this section.
15 U.S.C. 77e, 77f, 77g, 77h, 77j, 77k, 77s, 77z-2, 77z-3, 77aa(25), 77aa(26), 77ddd, 77eee, 77ggg, 77hhh, 77iii, 77jjj, 77nnn, 77sss, 78c, 78i, 78j, 78j-3, 78
(a)
(b)
(1)
(2)
(ii) Describe any known material trends, favorable or unfavorable, in the registrant's capital resources. Indicate any expected material changes in the mix and relative cost of such resources. The discussion must consider changes between equity, debt and any off-balance sheet financing arrangements.
(3)
(ii) Describe any known trends or uncertainties that have had or that the registrant reasonably expects will have a material favorable or unfavorable impact on net sales or revenues or income from continuing operations. If the registrant knows of events that are reasonably likely to cause a material change in the relationship between costs and revenues (such as known or reasonably likely future increases in costs of labor or materials or price increases or inventory adjustments), the reasonably likely change in the relationship must be disclosed.
(iii) If the statement of comprehensive income presents material changes from period to period in net sales or revenue, if applicable, describe the extent to which such changes are attributable to changes in prices or to changes in the volume or amount of goods or services being sold or to the introduction of new products or services.
(4)
1. Generally, the discussion must cover the periods covered by the financial statements included in the filing and the registrant may use any presentation that in the registrant's judgment enhances a reader's understanding. A smaller reporting company's discussion must cover the two-year period required in Article 8 of Regulation S-X and may use any presentation that in the registrant's
2. Discussions of liquidity and capital resources may be combined whenever the two topics are interrelated.
3. If the reasons underlying a material change in one line item in the financial statements also relate to other line items, no repetition of such reasons in the discussion is required and a line-by-line analysis of the financial statements as a whole is not required or generally appropriate. Registrants need not recite the amounts of changes from period to period which are readily computable from the financial statements. The discussion must not merely repeat numerical data contained in the financial statements.
4. The term “liquidity” as used in this Item refers to the ability of an enterprise to generate adequate amounts of cash to meet the enterprise's needs. Except where it is otherwise clear from the discussion, the registrant must indicate those balance sheet conditions or income or cash flow items which the registrant believes may be indicators of its liquidity condition. Liquidity generally must be discussed on both a long-term and short-term basis. The issue of liquidity must be discussed in the context of the registrant's own business or businesses. For example, a discussion of working capital may be appropriate for certain manufacturing, industrial, or related operations but might be inappropriate for a bank or public utility.
5. Where financial statements presented or incorporated by reference in the registration statement are required by § 210.4-08(e)(3) of Regulation S-X [17 CFR part 210] to include disclosure of restrictions on the ability of both consolidated and unconsolidated subsidiaries to transfer funds to the registrant in the form of cash dividends, loans or advances, the discussion of liquidity must include a discussion of the nature and extent of such restrictions and the impact such restrictions have had or are expected to have on the ability of the parent company to meet its cash obligations.
6. Any forward-looking information supplied is expressly covered by the safe harbor rule for projections. See Rule 175 under the Securities Act [17 CFR 230.175 ], Rule 3b-6 under the Exchange Act [17 CFR 240.3b-6], and Securities Act Release No. 6084 (June 25, 1979) (44 FR 33810).
7. All references to the registrant in the discussion and in this Item mean the registrant and its subsidiaries consolidated.
8. Discussion of commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on a registrant's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources must be provided even when the arrangement results in no obligations being reported in the registrant's consolidated balance sheets. Such off-balance sheet arrangements may include: Guarantees; retained or contingent interests in assets transferred; contractual arrangements that support the credit, liquidity or market risk for transferred assets; obligations that arise or could arise from variable interests held in an unconsolidated entity; or obligations related to derivative instruments that are both indexed to and classified in a registrant's own equity under U. S. GAAP.
9. If the registrant is a foreign private issuer, briefly discuss any pertinent governmental economic, fiscal, monetary, or political policies or factors that have materially affected or could materially affect, directly or indirectly, their operations or investments by United States nationals. The discussion must also consider the impact of hyperinflation if hyperinflation has occurred in any of the periods for which audited financial statements or unaudited interim financial statements are filed. See Rule 3-20(c) of Regulation S-X for a discussion of cumulative inflation rates that may trigger this requirement.
10. If the registrant is a foreign private issuer, the discussion must focus on the primary financial statements presented in the registration statement or report. The foreign private issuer must refer to the reconciliation to United States generally accepted accounting principles and discuss any aspects of the difference between foreign and United States generally accepted accounting principles, not discussed in the reconciliation, that the registrant believes is necessary for an understanding of the financial statements as a whole, if applicable.
11. The term statement of comprehensive income means a statement of comprehensive income as defined in § 210.1-02 of Regulation S-X.
(c)
(1)
(2)
(ii) Discuss any material changes in the registrant's results of operations with respect to either the most recent quarter for which a statement of comprehensive income is provided and the corresponding quarter for the preceding fiscal year or, in the alternative, the most recent quarter for which a statement of comprehensive income is provided and the immediately preceding sequential quarter. If the latter immediately preceding sequential quarter is discussed, then provide in summary form the financial information for that immediately preceding sequential quarter that is subject of the discussion or identify the registrant's prior filings on EDGAR that present such information. If there is a change in the form of presentation from period to period that forms the basis of comparison from previous periods provided pursuant to this paragraph, the registrant must discuss the reasons for changing the basis of comparison and provide both comparisons in the first filing in which the change is made.
1. If interim financial statements are presented together with financial statements for full fiscal years, the discussion of the interim financial information must be prepared pursuant to this paragraph (c) and the discussion of the full fiscal year's information must be prepared pursuant to paragraph (b) of this section. Such discussions may be combined. Instructions 3, 6, 8 and 11 to paragraph (b) of this section apply to this paragraph (c).
2. The registrant's discussion of material changes in results of operations must identify any significant elements of the registrant's income or loss from continuing operations which do not arise from or are not necessarily representative of the registrant's ongoing business.
(a) For each partnership proposed to be included in a roll-up transaction provide: Ratio of earnings to fixed charges, cash and cash equivalents, total assets at book value, total assets at the value assigned for purposes of the roll-up transaction (if applicable), total liabilities, general and limited partners' equity, net increase (decrease) in cash and cash equivalents, net cash provided by operating activities, distributions; and per unit data for net income (loss), book value, value assigned for purposes of the roll-up transaction (if applicable), and distributions (separately identifying distributions that represent a return of capital). This information must be provided for the previous two fiscal years. Additional or other information must be provided if material to an understanding of each partnership proposed to be included in a roll-up transaction.
(b)
3. * * *
a. If the summarized financial information required by paragraph (b)(1) of this section is presented on a basis of accounting other than U.S. GAAP or IFRS as issued by the IASB, then present a reconciliation to U.S. GAAP and Regulation S-X, pursuant to Item 17 of Form 20-F. If a reconciliation is unavailable or not obtainable without unreasonable cost or expense, at a minimum provide a narrative description of all material variations in accounting principles, practices and methods used in preparing the non-U.S. GAAP financial statements used as a basis for the summarized financial information from those accepted in the U.S.
(b) * * *
(2)
a. If the summarized financial information required by paragraph (b)(1) of this section is presented on a basis of accounting other than U.S. GAAP or IFRS as issued by the IASB, then present a reconciliation to U.S. GAAP and Regulation S-X, pursuant to Item 17 of Form 20-F. If a reconciliation is unavailable or not obtainable without unreasonable cost or expense, at a minimum provide a narrative description of all material variations in accounting principles, practices and methods used in preparing the non-U.S. GAAP financial statements used as a basis for the summarized financial information from those accepted in the U.S.
(b)
15 U.S.C. 77c, 77f, 77g, 77h, 77j, 77s, 77z-2, 77z-3, 77sss, 78c, 78
The text of Form S-1 does not, and this amendment will not, appear in the Code of Federal Regulations.
1. * * *
(f) As to Item 11, a brief statement of the general character of the business done and intended to be done and a brief statement of the nature and present status of any material pending legal proceedings;
(g) A tabular presentation of notes payable, long term debt, deferred credits, minority interests, if material, and the equity section of the latest balance sheet filed, as may be appropriate; and
(h) Subject to appropriate variation to conform to the nature of the registrant's business, provide summarized financial information defined by Rule 1-02(bb)(1)(i) and (ii) of Regulation S-X (§ 210.1-02(bb) of this chapter) in comparative columnar form for the periods for which financial statements are required by Regulation S-X (17 CFR part 210).
The text of Form S-20 does not, and this amendment will not, appear in the Code of Federal Regulations.
Include financial statements meeting the requirements of Regulation S-X [17 CFR 210].
Furnish the following undertakings:
1. The undersigned registrant hereby undertakes to file a post-effective amendment, not later than 120 days after the end of each fiscal year subsequent to that covered by the financial statements presented herein, containing financial statements meeting the requirements of Regulation S-X [17 CFR 210].
The text of Form F-1 does not, and this amendment will not, appear in the Code of Federal Regulations.
1. * * *
(c) * * *
(v) As to Item 4, a brief statement of the general character of the business done and intended to be done and a brief statement of the nature and present status of any material pending legal proceedings;
(vi) Subject to appropriate variation to conform to the nature of the registrant's business, provide summarized financial information defined by Rule 1-02(bb)(1)(i) and (ii) of Regulation S-X (§ 210.1-02(bb) of this chapter) in comparative columnar form for the periods for which financial statements are required by Item 8.A. of Form 20-F. If interim period financial statements are included, the summarized financial information should be updated for that interim period, which may be unaudited, provided that fact is stated. If summarized financial data for interim periods is provided, comparative data from the same period in the prior financial year shall also be provided, except that the requirement for comparative balance sheet data is satisfied by presenting the year end balance sheet information.
15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78k, 78k-1, 78
15 U.S.C. 78a
The text of Form 20-F does not, and this amendment will not, appear in the Code of Federal Regulations.
The purpose of this standard is to provide management's explanation of factors that have materially affected the company's financial condition and results of operations for the historical periods covered by the financial statements, and management's assessment of factors and trends which are anticipated to have a material effect on the company's financial condition and results of operations in future periods. This discussion and analysis must provide a narrative explanation of the registrant's financial statements that allows investors to view the registrant from management's perspective.
Discuss the company's financial condition, changes in financial condition and results of operations for each year and interim period for which financial statements are required. The discussion must include a quantitative and qualitative description of the reasons underlying material changes, including where material changes within a line item offset one another, to the extent necessary for an understanding of the company's business as a whole. Information provided also must relate to all separate segments and/or other subdivisions (
1. If the statement of comprehensive income presents material changes from period to period in net sales or revenue, if applicable, describe the extent to which such changes are attributable to changes in prices or to changes in the volume or amount of products or services being sold or to the introduction of new products or services.
2. If the currency in which financial statements are presented is of a country that has experienced hyperinflation, the existence of such inflation, a five year history of the annual rate of inflation and a discussion of the impact of hyperinflation on the company's business must be disclosed.
3. Provide information regarding the impact of foreign currency fluctuations on the company, if material, and the extent to which foreign currency net investments are hedged by currency borrowings and other hedging instruments.
4. Provide information regarding any governmental economic, fiscal, monetary or political policies or factors that have materially affected, or could materially affect, directly or indirectly, the company's operations or investments by host country shareholders.
1. Information regarding the company's liquidity (both short and long term), including:
(a) A description of the internal and external sources of liquidity and a brief discussion of any material unused sources of liquidity. Include a statement by the company that, in its opinion, the working capital is sufficient for the company's present requirements, or, if not, how it proposes to provide the additional working capital needed.
(b) an evaluation of the sources and amounts of the company's cash flows, including the nature and extent of any legal or economic restrictions on the ability of subsidiaries to transfer funds to the company in the form of cash dividends, loans or advances and the impact such restrictions have had or are expected to have on the ability of the company to meet its cash obligations.
2. Information regarding the type of financial instruments used, the maturity profile of debt, currency and interest rate structure. The discussion also must include funding and treasury policies and objectives in terms of the manner in which treasury activities are controlled, the currencies in which cash and cash equivalents are held, the extent to which borrowings are at fixed rates, and the use of financial instruments for hedging purposes.
3. Information regarding the company's material cash requirements, including commitments for capital expenditures, as of the end of the latest financial year and any subsequent interim period and an indication of the general purpose of such requirements and the anticipated sources of funds needed to satisfy such requirements.
A registrant that does not apply in its primary financial statements IFRS as issued by the IASB must discuss information about its critical accounting estimates. This disclosure should supplement, not duplicate, the description of accounting policies in the notes to the financial statements.
Critical accounting estimates. Critical accounting estimates are those estimates made in accordance with generally accepted accounting principles that involve a significant level of estimation uncertainty and have had or are reasonably likely to have a material impact on financial condition or results of operations. Discuss, to the extent material, why each critical accounting estimate is subject to uncertainty, how much each estimate has changed during the reporting period, and the sensitivity of the reported amounts to the material
1. Refer to the Commission's interpretive releases (No. 33-6835) dated May 18, 1989, (No. 33-8056) dated January 22, 2002, (No. 33-8350) dated Dec. 19, 2003, (No. 33-9144) dated September 17, 2010, and (No. 33-10751) dated January 30, 2020 for guidance in preparing this discussion and analysis by management of the company's financial condition and results of operations.
2. The discussion must focus on the primary financial statements presented in the document. You should refer to the reconciliation to U.S. GAAP, if any, and discuss any aspects of the differences between foreign and U.S. GAAP, not otherwise discussed in the reconciliation, that you believe are necessary for an understanding of the financial statements as a whole.
3. We encourage you to supply forward-looking information, but that type of information is not required. Forward-looking information is covered expressly by the safe harbor provisions of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking information is different than presently known data which will have an impact on future operating results, such as known future increases in costs of labor or materials. You are required to disclose this latter type of data if it is material.
4. To the extent the primary financial statements reflect the use of exceptions permitted or required by IFRS 1, the issuer must:
a. Provide detailed information as to the exceptions used, including:
i. An indication of the items or class of items to which the exception was applied; and
ii. A description of what accounting principle was used and how it was applied;
b. Include, where material, qualitative disclosure of the impact on financial condition, changes in financial condition and results of operations that the treatment specified by IFRS would have had absent the election to rely on the exception.
5. An issuer filing financial statements that comply with IFRS as issued by the IASB must, in providing information in response to paragraphs of this Item 5 that refer to pronouncements of the FASB, provide disclosure that satisfies the objective of the Item 5 disclosure requirements. In responding to this Item 5, an issuer need not repeat information contained in financial statements that comply with IFRS as issued by the IASB.
6. Generally, the discussion must cover the periods covered by the financial statements and the registrant may use any format that in the registrant's judgment enhances a reader's understanding. For registrants providing financial statements covering three years in a filing, a discussion of the earliest of the three years may be omitted if such discussion was already included in any other of the registrant's prior filings on EDGAR that required disclosure in compliance with Item 5 of Form 20-F, provided that registrants electing not to include a discussion of the earliest year must include a statement that identifies the location in the prior filing where the omitted discussion may be found.
7. Discussion of commitments or obligations, including contingent obligations, arising from arrangements with unconsolidated entities or persons that have or are reasonably likely to have a material current or future effect on a registrant's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resources must be provided even when the arrangement results in no obligations being reported in the registrant's consolidated balance sheets. Such off-balance sheet arrangements may include: Guarantees; retained or contingent interests in assets transferred; contractual arrangements that support the credit, liquidity or market risk for transferred assets; obligations that arise or could arise from variable interests held in an unconsolidated entity; or obligations related to derivative instruments that are both indexed to and classified in a registrant's own equity, or not reflected in the statement of financial position.
1. You must provide the information required by Item 5.A.2 with respect to hyperinflation if hyperinflation has occurred in any of the periods for which you are required to provide audited financial statements or unaudited interim financial statements in the document. See Rule 3-20(c) of Regulation S-X for a discussion of cumulative inflation rates that trigger this requirement.
In initial registration statements, if the financial statements presented pursuant to Item 8.A.2 are prepared in accordance with U.S. generally accepted accounting principles, the earliest of the three years may be omitted if that information has not previously been included in a filing made under the Securities Act of 1933 or the Securities Exchange Act of 1934.
The text of Form 40-F does not, and this amendment will not, appear in the Code of Federal Regulations.
(11)
The text of Form 8-K does not, and this amendment will not, appear in the Code of Federal Regulations.
(c) For purposes of this Item 2.03,
(1) A
(2) a
(3) an
(4) a short-term debt obligation that arises other than in the ordinary course of business.
(d) For purposes of this Item 2.03,
(1) Any obligation under a guarantee contract that has any of the characteristics identified in FASB ASC paragraph 460-10-15-4 (Guarantees Topic), as may be modified or supplemented, and that is not excluded from the initial recognition and measurement provisions of FASB ASC paragraphs 460-10-15-7, 460-10-25-1, and 460-10-30-1.
(2) A retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets;
(3) Any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument, except that it is both indexed to the registrant's own stock and classified in stockholders' equity in the registrant's statement of financial position, and therefore excluded from the scope of FASB ASC Topic 815,
(4) Any obligation, including a contingent obligation, arising out of a variable interest (as defined in the FASB ASC Master Glossary), as may be modified or supplemented in an unconsolidated entity that is held by, and material to, the registrant, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with, the registrant.
By the Commission.
Office of the Comptroller of the Currency, Treasury (OCC); Board of Governors of the Federal Reserve System (Board); Federal Deposit Insurance Corporation (FDIC); Securities and Exchange Commission (SEC); and Commodity Futures Trading Commission (CFTC).
Notice of proposed rulemaking.
The OCC, Board, FDIC, SEC, and CFTC (together, the agencies) are inviting comment on a proposal that would amend the regulations implementing section 13 of the Bank Holding Company Act (BHC Act). Section 13 contains certain restrictions on the ability of a banking entity or nonbank financial company supervised by the Board to engage in proprietary trading and have certain interests in, or relationships with, a hedge fund or private equity fund. The proposed amendments are intended to continue the agencies' efforts to improve and streamline the regulations implementing section 13 of the BHC Act by modifying and clarifying requirements related to the covered fund provisions.
Comments must be received on or before April 1, 2020.
Interested parties are encouraged to submit written comments jointly to all of the agencies. Commenters are encouraged to use the title “Proposed Revisions to Restrictions on Proprietary Trading and Certain Interests in, and Relationships with, Hedge Funds and Private Equity Funds” to facilitate the organization and distribution of comments among the agencies. Commenters are also encouraged to identify the number of the specific question for comment to which they are responding. Comments should be directed to:
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You may review comments and other related materials that pertain to this rulemaking action by any of the following methods:
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The docket may be viewed after the close of the comment period in the same manner as during the comment period.
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All public comments will be made available on the Board's website at
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Please submit your comments using only one method. All comments must be submitted in English, or if not, accompanied by an English translation. Comments will be posted as received to
• Use the SEC's internet comment form (
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Section 13 of the Bank Holding Company Act of 1956 (BHC Act),
• Underwriting and market making-related activities;
• Risk-mitigating hedging activities;
• Activities on behalf of customers;
• Activities for the general account of insurance companies; and
• Trading and covered fund activities and investments by non-U.S. banking entities solely outside the United States.
In addition, section 13 of the BHC Act contains an exemption that permits banking entities to organize and offer, including sponsor, covered funds, subject to certain restrictions, including that banking entities do not rescue investors in those funds from loss, and are not themselves exposed to significant losses due to investments in or other relationships with these funds.
Authority under section 13 of the BHC Act for developing and adopting regulations to implement the prohibitions, restrictions, and exemptions of section 13 is shared among the Board, the FDIC, the OCC, the SEC, and the CFTC (individually, an agency, and collectively, the agencies).
The agencies published a notice of proposed rulemaking in July 2018 (the 2018 proposed rule or 2018 proposal) that proposed several amendments to the 2013 rule.
As part of the 2018 proposal, the agencies suggested targeted changes to the provisions of the 2013 rule relating to acquiring or retaining an ownership interest in, sponsoring, or having certain relationships with a fund and sought comments on other aspects of the covered fund provisions beyond those changes for which specific rule text was proposed.
The staffs of the agencies also have addressed several questions concerning the regulations implementing section 13 through a series of staff Frequently Asked Questions (FAQs).
The agencies invited comment on all aspects of the 2018 proposal and received over 75 unique comments and approximately 3,700 comments from individuals using a version of a short form letter to express opposition to the 2018 proposed rule.
Various industry groups suggested maintaining the 2013 rule's base definition of covered fund, citing costs associated with complying with a new definition, while others supported an alternative definition. A number of industry groups and banks, and several Members of Congress, urged the agencies to amend the definition of covered fund to exclude certain funds, including the following: (1) Family wealth investment vehicles; (2) funds that extend credit to customers; (3) long-term investment funds that do not engage in any short-term proprietary trading; (4) venture capital funds; and (5) customer facilitation funds. Various public interest commenters objected to any additional exclusions, citing insufficient notice in the 2018 proposal and the potential for evasion of the 2013 rule.
Commenters also proposed modifying the 2013 rule's existing exclusions from the definition of covered fund. Numerous industry groups suggested revising the exclusion for foreign public funds to focus on the characteristics of the fund and foreign regulations, rather than imposing specific conduct requirements that are difficult to monitor and verify. Several industry groups made various suggestions for simplifying the loan securitization exemption, including expanding the securities an issuer is permitted to hold and permitting an issuer to hold up to a certain percent of assets in non-loan assets.
Finally, several bank and industry group commenters supported making the exemptions under section 23A of the Federal Reserve Act and the Board's Regulation W available under section 13(f) of the BHC Act. Several such commenters also supported exempting certain payment, clearing, and settlement services from the restrictions. A foreign bank industry group also recommended limiting the application of section 13(f) to the U.S. operations of foreign firms.
The agencies are issuing a notice of proposed rulemaking that proposes specific changes to the restrictions on covered fund investments and activities and other issues related to the treatment of investment funds in the implementing regulations (the proposal or the proposed rule). The proposed rule is intended to improve and streamline the covered fund provisions and provide clarity to banking entities so that they can offer financial services and engage in other permissible activities in a manner that is consistent with the requirements of section 13 of the BHC Act.
To better limit the extraterritorial impact of the implementing regulations, the proposal would exempt the activities of certain funds that are organized outside of the United States and offered to foreign investors (qualifying foreign excluded funds) from the restrictions of the implementing regulations. In certain circumstances, some foreign funds that are not “covered funds” may be subject to the implementing regulations as “banking entities,” if they are controlled by a foreign banking entity, and thus could be subject to more onerous compliance obligations than are imposed on similarly-situated covered funds, even though the foreign funds have limited nexus to the United States. This provision would codify an existing policy statement by the Federal banking agencies that addresses the potential attribution to a foreign banking entity of the activities and investments of qualifying foreign excluded funds.
The proposal also would make modifications to several existing exclusions from the covered fund provisions, to provide clarity and simplify compliance with the requirements of the implementing regulations. First, the proposal would revise certain restrictions in the foreign public funds exclusion to more closely align the provision with the exclusion for similarly-situated U.S. registered investment companies. Second, the proposed rule would permit loan securitizations excluded from the rule to hold a small amount of non-loan assets, consistent with past industry practice, and codify existing staff-level guidance regarding this exclusion. In addition, the proposed rule would revise the exclusion for small business investment companies to account for the life cycle of those companies and would request comment on whether to clarify the scope of the exclusion for public welfare investments, including as it relates to rural business investment companies and qualified opportunity zone funds. Finally, the proposed rule would address concerns about certain components of the preamble to the 2013 rule related to calculating a banking entity's ownership interests in covered funds.
The agencies recognized in the preamble to the 2013 rule that the definition of “covered fund” was expansive
The proposal also would include two new exclusions that would allow banking entities to provide certain traditional financial services via a fund structure, subject to certain safeguards.
In addition, the proposed rule would permit a banking entity to engage in a limited set of covered transactions with a covered fund the banking entity sponsors or advises or with which the banking entity has certain other relationships. The implementing regulations generally prohibit all covered transactions between a covered fund and its banking entity sponsor or investment adviser. The agencies recognize that the existing restrictions have prevented banking entities from providing certain traditional banking services to covered funds, such as standard payment, clearing, and settlement services to related covered funds.
Lastly, the proposal would clarify certain aspects of the definition of ownership interest. Currently, due to the broad definition of ownership interest, some loans by banking entities to covered funds could be deemed to be ownership interests. The proposal would provide a safe harbor for bona fide senior loans or senior debt instruments to make clear that an “ownership interest” in a fund does not include such credit interests in the fund. In addition, the proposal would provide clarity about the types of credit rights that would be considered within the scope of the definition of ownership interest. Finally, the proposed rule would simplify compliance efforts by tailoring the calculation of a banking entity's compliance with the implementing regulations' aggregate fund limit and covered fund deduction, and provide clarity to banking entities regarding their permissible investments made alongside covered funds.
The agencies request comment regarding all aspects of the proposed rule. Specific requests for comment are included in the following sections. Comments on the proposal must be submitted to the agencies on or before April 1, 2020.
Since the adoption of the 2013 rule, a number of foreign banking entities, foreign government officials, and other market participants have expressed concern regarding instances in which certain funds offered and sold outside of the United States are excluded from the covered fund definition but still could be considered banking entities in certain circumstances (foreign excluded funds).
The Federal banking agencies released a policy statement on July 21, 2017 (the 2017 policy statement) to address concerns about the possible unintended consequences and extraterritorial impact of section 13 and the 2013 rule for foreign excluded funds.
For purposes of the 2017 policy statement, a “qualifying foreign excluded fund” meant, with respect to a foreign banking entity, an entity that:
(1) Is organized or established outside the United States and the ownership interests of which are offered and sold solely outside the United States;
(2) Would be a covered fund were the entity organized or established in the United States, or is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in financial instruments for resale or other disposition or otherwise trading in financial instruments;
(3) Would not otherwise be a banking entity except by virtue of the foreign banking entity's acquisition or retention of an ownership interest in, or sponsorship of, the entity;
(4) Is established and operated as part of a bona fide asset management business; and
(5) Is not operated in a manner that enables the foreign banking entity to evade the requirements of section 13 or implementing regulations.
To provide additional time to consider this issue, the 2017 policy statement provided that the Federal banking agencies would not propose to take action during the one-year period ending July 21, 2018, against a foreign banking entity
In response to questions in the 2018 proposal, several commenters urged the agencies to exclude controlled foreign funds offered solely outside the United States.
To provide greater clarity and certainty to banking entities and qualifying foreign excluded funds, the agencies are proposing, pursuant to their authority under section 13(d)(1)(J) of the BHC Act, to exempt the activities of qualifying foreign excluded funds. Specifically, the agencies are proposing to exempt from the proprietary trading prohibition and covered fund restrictions the purchase or sale of a financial instrument by a qualifying foreign excluded fund and the acquisition or retention of any ownership interest in, or the sponsorship of, a covered fund by a qualifying foreign excluded fund, if any acquisition or retention of an ownership interest in, or sponsorship of, the qualifying foreign excluded fund by the foreign banking entity meets the requirements for permitted covered fund activities and investments solely outside the United States, as provided in section _.13(b) of the rule. Under the proposal, a qualifying foreign excluded fund has the same meaning as in the 2017 and 2019 policy statements as described above.
Section 13(d)(1)(H) and (I) of the BHC Act permit foreign banking entities to conduct certain trading and investing activities outside the United States, notwithstanding the restrictions under section 13(a) of the BHC Act. As indicated in the preamble to the 2013 rule, the purpose of these statutory provisions is to limit the extraterritorial application of section 13 as it applies to foreign banking entities.
In addition, section 13(d)(1)(J) of the BHC Act gives the agencies rulemaking authority to exempt activities from the prohibitions of section 13, provided the agencies determine that the activity in question would promote and protect the safety and soundness of the banking entity and the financial stability of the United States.
Exempting the activities of qualifying foreign excluded funds in the circumstances described above would provide clarity and certainty to, and likely promote and protect the safety and soundness of, such banking entities. This relief would be limited to the asset management activities of these foreign funds, which are organized outside of the United States and operate pursuant to the local laws of foreign jurisdictions. Thus, if the activities of these foreign funds were subjected to the restrictions applicable to banking entities, generally, their asset management activities may be significantly disrupted, and the foreign banking entities may be at a competitive disadvantage to other foreign bank and non-bank market participants conducting asset management business outside of the United States. Exempting the activities of these foreign funds would also allow their foreign banking entity sponsors to continue to conduct their asset management business outside the United States as long as the foreign banking entity's acquisition of an ownership interest in or sponsorship of the fund meets the requirements in section _.13(b). Thus, the proposed exemption may have the effect of promoting the safety and soundness of these foreign funds and their sponsors, while at the same time limiting the extraterritorial impact of the implementing regulations, consistent with the purposes of section 13(d)(1)(H) and (I) of the BHC Act.
The proposed exemption would also promote and protect U.S. financial stability. While qualifying foreign excluded funds have very limited nexus to the U.S. financial system, they are permitted to invest in U.S. companies. Therefore, to the extent that these funds have any direct impact on U.S. financial stability, it would be to promote U.S. financial stability by providing additional capital and liquidity to U.S. capital markets. Because the proposed exemption would require that the foreign banking entity's acquisition of an ownership interest in or sponsorship of the fund meets the requirements in section _.13(b), the exemption would ensure that the risks of the investments made by these foreign funds would be booked to foreign entities in foreign jurisdictions, thus promoting and protecting U.S. financial stability. Additionally, subjecting such funds to the requirements of section 13 of the BHC Act imposed on banking entities could precipitate disruptions in foreign capital markets, which could generate spillover effects in the U.S. financial system.
In addition to the foreign excluded fund issues discussed above with respect to the banking entity definition, there are other foreign fund issues that arise under the covered fund definition. In order to provide consistent treatment between U.S. registered investment companies and their foreign equivalents, the implementing regulations exclude foreign public funds from the definition of covered fund. A foreign public fund is generally defined under the implementing regulations as any issuer that is organized or established outside of the United States and the ownership interests of which are (1) authorized to be offered and sold to retail investors in the issuer's home jurisdiction and (2) sold predominantly through one or more public offerings outside of the United States.
The 2013 rule places an additional condition on a U.S. banking entity's ability to rely on the foreign public fund exclusion with respect to any foreign fund it sponsors.
In adopting the foreign public fund exclusion, the agencies' view was that it was appropriate to exclude these funds from the “covered fund” definition because they are sufficiently similar to U.S. registered investment companies.
Based on experience implementing the 2013 rule, as well as discussions with and comments received from regulated entities, it appears that some of the conditions of the foreign public fund exclusion may not be necessary to ensure consistent treatment of foreign public funds and registered investment companies. Moreover, some conditions may make it difficult for a non-U.S. fund to qualify for the exclusion or for a banking entity to validate whether a non-U.S. fund qualifies for the exclusion, resulting in certain non-U.S. funds that are similar to U.S. registered investment companies being treated as covered funds. For example, the requirement that the fund be authorized to be offered and sold to retail investors in the fund's home jurisdiction (the home jurisdiction requirement) disqualifies certain funds that are organized in one jurisdiction but only authorized to be sold to retail investors in another jurisdiction.
Additionally, the requirement that a fund be sold “predominantly” through one or more public offerings may cause certain compliance and monitoring difficulties.
To address the concerns noted above related to the home jurisdiction requirement and the requirement that ownership interests be sold predominantly through public offerings, the agencies are proposing to replace those two requirements with a requirement that the fund is authorized to offer and sell ownership interests, and such interests are offered and sold, through one or more public offerings. The agencies are also proposing to modify the definition of “public offering” from the implementing regulations to add a new requirement that the distribution is subject to substantive disclosure and retail investor protection laws or regulations, to help ensure that funds qualifying for this exclusion are sufficiently similar to U.S. registered investment companies. Additionally, the proposal would only apply the condition that the distribution comply with all applicable requirements in the jurisdiction where it is made to instances in which the banking entity acts as the investment manager, investment adviser, commodity trading advisor, commodity pool operator, or sponsor. This change is intended to address the potential difficulty that a banking entity investing in a third-party sponsored fund may have in determining whether the distribution of such fund complied with all the requirements in the jurisdiction where it was made.
The changes discussed above would seek to ensure that the exclusion remains limited to funds that are authorized to be sold to retail investors, but it would no longer require the fund to be authorized to be sold to retail investors in the jurisdiction where it is organized. Additionally, while the fund would still be required to be offered and sold through one or more public offerings (which would require, among other things, that the distribution be made in a jurisdiction outside the United States that subjects the foreign public fund to substantive disclosure and retail investor protection laws or regulations), the proposal would eliminate the requirement that it be sold “predominantly” through one or more public offerings. This change would eliminate the difficulty that banking entities have described in tracking the specific distribution patterns of ownership interests in such funds, and it would more closely align the treatment of foreign public funds with that of U.S. registered investment companies, which have no such requirement. The agencies believe the revised requirement would help ensure that the foreign public fund is sufficiently similar to a U.S. registered investment company.
To simplify the requirements of the exclusion and address concerns described by banking entities with the difficulty in tracking the sale of ownership interests to employees and their immediate family members, the proposal would eliminate the limitation on selling ownership interests of the issuer to employees (other than senior executive officers) of the sponsoring banking entity or the issuer (or affiliates of the banking entity or issuer). This change would also help to align the treatment of foreign public funds with that of U.S. registered investment companies, as the exclusion for U.S. registered investment companies has no such limitation. The proposal would continue to limit the sale of ownership interests to directors or senior executive officers of the sponsoring banking entity or the fund (or their affiliates), as the agencies believe that such a requirement would be simpler for a banking entity to track. As discussed in the preamble to the 2013 rule, this requirement is intended to prevent evasion of section 13 of the BHC Act.
As reflected in the detailed questions that follow, the agencies request comment on all aspects of the proposed modifications to the foreign public fund exclusion, including whether the exclusion is effective in identifying foreign funds that may be sufficiently similar to U.S. registered investment companies and permitting U.S. banking entities and their foreign affiliates to carry on traditional asset management businesses outside of the United States, without creating opportunities for evasion of the requirements of section 13 of the BHC Act.
Section 13 of the BHC Act provides that “[n]othing in this section shall be construed to limit or restrict the ability of a banking entity . . . to sell or securitize loans in a manner otherwise permitted by law.”
Since the adoption of the 2013 rule, several banking entities and other participants in the loan securitization industry have commented that the limited set of permissible assets has inappropriately restricted their ability to use the loan securitization exclusion. The agencies asked several questions regarding the efficacy and scope of the exclusion and the Loan Securitization Servicing FAQ in the 2018 proposal.
The 2013 rule defines “loan” to include leases and permits loan securitizations to hold rights or other assets (servicing assets) that arise from the structure of the loan securitization or from the loans supporting a loan securitization.
Several commenters on the 2018 proposal supported codifying this FAQ, with one commenter encouraging the agencies to include specific examples of servicing assets.
The agencies propose codifying the Loan Securitization Servicing FAQ to clarify the scope of the servicing asset provision.
In the preamble to the 2013 rule, the agencies declined to permit loan securitizations to hold a certain amount of non-loan assets.
Several commenters on the 2018 proposal disagreed with the agencies'
One commenter suggested that permitting loan securitizations to hold a small number of non-loan assets, typically fixed income securities, would decrease compliance burdens associated with analyzing fund assets and increase fund managers' flexibility in responding to market conditions and customer preferences.
After considering the comments received on the 2018 proposal, the agencies are proposing to allow a loan securitization vehicle to hold up to five percent of assets in non-loan assets. Authorizing loan securitizations to hold small amounts of non-loan assets could, consistent with section 13 of the BHC Act, permit loan securitizations to respond to market demand and reduce compliance costs associated with the securitization process without significantly increasing risk to banking entities and the financial system. The proposed limit on the amount of non-loan assets also would assuage potential concerns that allowing certain non-loan assets will lead to evasion, indirect proprietary trading, and other impermissible activities or excessive risk to the banking entity. Moreover, loan securitizations provide an important avenue for banking entities to fund lending programs, and allowing loan securitizations to hold a small amount of non-loan assets in response to customer and market demand may increase a banking entity's capacity to provide financing and lending.
The loan securitization exclusion permits issuers to hold certain types of contractual rights or assets directly arising from the loans supporting the asset-backed securities that a loan securitization relying on the exclusion may hold, including cash equivalents. In response to questions about the scope of the cash equivalent provision, the Loan Securitization Servicing FAQ stated that “cash equivalents” means high quality, highly liquid investments whose maturity corresponds to the securitization's expected or potential need for funds and whose currency corresponds to either the underlying loans or the asset-backed securities.
Section 13(d)(1)(E) of the BHC Act permits, among other things, a banking entity to make and retain investments that are designed primarily to promote the public welfare of the type permitted under 12 U.S.C. 24(Eleventh).
In response to the 2018 proposal, the agencies received one comment stating that the 2013 rule's exclusion for funds that are designed primarily to promote the public welfare does not account for community development investments that are made through investment vehicles. The commenter recommended expressly excluding all investments that qualify for Community Reinvestment Act (CRA) credit, including direct and indirect investments in a community development fund, small business investment company (SBIC), or similar fund.
The OCC's regulations implementing 12 U.S.C. 24(Eleventh) provide that investments that receive consideration as qualified investments under the regulations implementing the CRA (CRA-qualified investments) would also meet the public welfare investment requirements.
In particular, the agencies request comment on the following:
Consistent with section 13 of the BHC Act,
In response to the 2018 proposal,
The agencies propose to revise the exclusion for SBICs to clarify how the exclusion would apply to SBICs that surrender their licenses during wind-down phases. The proposed rule would specify that the exclusion for SBICs applies to an issuer that was an SBIC that has voluntarily surrendered its license to operate as a small business investment company in accordance with 13 CFR 107.1900 and does not make new investments (other than investments in cash equivalents) after such voluntary surrender.
The agencies believe that continuing to apply the SBIC exclusion to an issuer that has surrendered its SBIC license is appropriate because, absent these revisions, banking entities may become discouraged from investing in SBICs due to concern that an SBIC may become a covered fund during its wind-down phase. As indicated by the statutory exemption for investments in SBICs, section 13 of the BHC Act was not intended to discourage investments in SBICs.
The proposed rule includes conditions designed to ensure that the revised exclusion is not abused. In particular, the requirement that an issuer that has voluntarily surrendered its license does not make new investments (other than investments in cash equivalents) after surrendering its license is intended to ensure that the exclusion would only apply to funds that are actually winding down and not funds that are making new investments (whether wholly new or as follow-on investments to existing investments) or that are engaged in speculative activities. In addition, the exclusion would only apply to an issuer that surrenders its SBIC license in accordance with 13 CFR 107.1900. The agencies note that surrendering a license under 13 CFR 107.1900 requires the prior written approval of the Small Business Administration. Furthermore, because the exclusion would only apply to an issuer that voluntarily surrenders its SBIC license, the exclusion would not extend to an issuer if its SBIC license has been revoked.
The agencies request comment on the proposed revisions to the exclusion for SBICs. Specifically, the agencies request comment on the following.
The agencies are proposing to create a new exclusion from the definition of “covered fund” under § _.10(b) for credit funds that make loans, invest in debt, or otherwise extend the type of credit that banking entities may provide directly under applicable banking law. In the preamble to the 2013 rule, the agencies declined to establish an exclusion from the definition of covered fund for credit funds.
In the 2018 proposal, the agencies issued a broad request for comment on whether to provide new exclusions from the definition of covered fund to more effectively tailor the 2013 rule.
The agencies understand that many credit funds have not been able to utilize the joint venture and loan securitization exclusions
• Loans;
• Debt instruments;
• Related rights and other assets that are related or incidental to acquiring, holding, servicing, or selling loans, or debt instruments; and
• Certain interest rate or foreign exchange derivatives.
To ease compliance burdens, several provisions of the proposed exclusion are similar to and modeled on conditions in the loan securitization exclusion. For example, any related rights or other assets held that are securities must be cash equivalents, securities received in lieu of debts previously contracted with respect to loans held or, unique to the proposed credit funds exclusion, certain equity securities (or rights to acquire equity securities) received on customary terms in connection with the credit fund's loans or debt instruments.
As noted above, the proposed exclusion would permit the credit fund to receive and hold a limited amount of equity securities (or rights to acquire equity securities) that are received on customary terms in connection with the credit fund's loans or debt instruments.
The exclusion also would be subject to certain additional restrictions to ensure that the issuer is actually engaged in providing credit and credit intermediation and is not operated for the purpose of evading the provisions of section 13 of the BHC Act.
• The fund does not engage in activities that would constitute proprietary trading, as defined in § _.3(b)(1)(i) of the rule, as if the fund were a banking entity;
• The fund does not issue asset-backed securities.
In addition, a banking entity would not be able to rely on the credit fund exclusion unless certain conditions were met. If a banking entity sponsors or serves as an investment adviser or commodity trading advisor to a credit fund, the banking entity would be required to provide disclosures specified in section __.11(a)(8), and ensure that the activities of the credit fund are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly.
The agencies believe that the proposed credit fund exclusion would (1) address the application of the covered fund provisions to credit-related activities in which banking entities are permitted to engage directly and (2) be consistent with and effectuate Congress's intent that section 13 of the BHC Act not limit or restrict banking entities' ability to sell loans.
The proposed credit fund exclusion limits the universe of potential funds that could rely on the exclusion by clearly specifying the types of activities those funds may engage in. Excluded credit funds could transact in or hold only loans, permissible debt instruments, and certain related rights or assets. These financial products, and the regulations delimiting the use thereof, are well-known and should not raise administrability and evasion concerns. Similarly, the requirement
The agencies request comment on all aspects of the proposed credit fund exclusion.
Under the implementing regulations, venture capital funds that invest in small businesses and start-up businesses that would be investment companies but for the exclusion contained in section 3(c)(1) or 3(c)(7) of the Investment Company Act are covered funds unless they otherwise qualify for an exclusion. The agencies are proposing to add an exclusion from the definition of “covered fund” under § _.10(b) of the rule that would allow banking entities to acquire or retain an ownership interest in, or sponsor, certain venture capital funds to the extent the banking entity is permitted to engage in such activities under otherwise applicable law. The exclusion
Contemporaneous with the passage of the Dodd-Frank Act, multiple Members of Congress made statements indicating that section 13 of the BHC Act should not restrict the activities of venture capital funds.
In the 2011 proposed rule, the agencies requested comment on whether to exclude venture capital funds from the definition of “covered fund.”
In 2017, the U.S. Department of the Treasury issued a report stating that the definition of “covered fund” is overly broad and that the covered fund provisions are not well-tailored to the objectives of section 13 of the BHC Act.
In response to the 2018 proposal, the agencies received several comments
As discussed in detail below, the agencies are proposing to exclude from the definition of “covered fund” qualifying venture capital funds. The proposal would define a qualifying venture capital fund as an issuer that:
• Is a venture capital fund as defined in 17 CFR 275.203(
• Does not engage in any activity that would constitute proprietary trading, under § _.3(b)(1)(i), as if it were a banking entity.
With respect to any banking entity that acts as a sponsor, investment adviser, or commodity trading advisor to the issuer, the banking entity would be required to:
• Provide in writing to any prospective and actual investor the disclosures required under § _.11(a)(8), as if the issuer were a covered fund; and
• Ensure that the activities of the issuer are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly.
In addition, a banking entity that relies on this exclusion would not, directly or indirectly, be permitted to guarantee, assume, or otherwise insure the obligations or performance of the issuer. Finally, the proposed exclusion would require a banking entity's ownership interest in or relationship with a qualifying venture capital fund to:
• Comply with the limitations imposed in § _.14 (except the banking entity may acquire and retain any ownership interest in the issuer) and § _.15 of the implementing regulations, as if the issuer were a covered fund; and
• Be conducted in compliance with, and subject to, applicable banking laws and regulations, including applicable safety and soundness standards.
These requirements are intended to ensure that banking entity investments in qualifying venture capital funds are consistent with the purposes of section 13 of the BHC Act. First, a qualifying venture capital fund must be a venture capital fund as defined in 17 CFR 275.203(
• Represents to investors and potential investors that it pursues a venture capital strategy;
• Immediately after the acquisition of any asset, other than qualifying investments or short-term holdings, holds no more than 20 percent of the amount of the fund's aggregate capital contributions and uncalled committed capital in assets (other than short-term holdings) that are not qualifying investments, valued at cost or fair value, consistently applied by the fund;
• Does not borrow, issue debt obligations, provide guarantees or otherwise incur leverage, in excess of 15 percent of the private fund's aggregate capital contributions and uncalled committed capital, and any such borrowing, indebtedness, guarantee or leverage is for a non-renewable term of no longer than 120 calendar days, except that any guarantee by the private fund of a qualifying portfolio company's obligations up to the amount of the value of the private fund's investment in the qualifying portfolio company is not subject to the 120 calendar day limit;
• Only issues securities the terms of which do not provide a holder with any right, except in extraordinary circumstances, to withdraw, redeem or require the repurchase of such securities but may entitle holders to receive distributions made to all holders pro rata; and
• Is not registered under section 8 of the Investment Company Act of 1940 . . . , and has not elected to be treated as a business development company pursuant to section 54 of that Act . . . .
“Qualifying investment” is defined in the SEC's regulation to be: (1) An equity security issued by a qualifying portfolio company that has been acquired directly by the private fund from the qualifying portfolio company; (2) any equity security issued by a qualifying portfolio company in exchange for an equity security issued by the qualifying portfolio company described in (1); or (3) any equity security issued by a company of which a qualifying portfolio company is a majority-owned subsidiary, as defined in section 2(a)(24) of the Investment Company Act, or a predecessor, and is acquired by the private fund in exchange for an equity security described in (1) or (2).
“Qualifying portfolio company,” in turn, is defined in the SEC's regulation to be a company that: (1) At the time of any investment by the private fund, is not reporting or foreign traded and does not control, is not controlled by or under common control with another company, directly or indirectly, that is reporting or foreign traded; (2) does not borrow or issue debt obligations in connection with the private fund's investment in such company and distribute to the private fund the proceeds of such borrowing or issuance in exchange for the private fund's investment; and (3) is not an investment company, a private fund, an issuer that would be an investment company but for the exemption provided by 17 CFR 270.3a-7, or a commodity pool.
In the preamble to the regulations adopting this definition of venture capital fund, the SEC explained that the definition's criteria distinguish venture capital funds from other types of funds, including private equity funds and hedge funds. For example, the SEC explained that it understood the criteria for “qualifying portfolio companies” to be characteristic of issuers of portfolio securities held by venture capital funds and, taken together, would operate to exclude most private equity funds and hedge funds from the venture capital fund definition.
The agencies believe the SEC's rationale for adopting this definition of venture capital fund could also support using this definition as the foundation for an exclusion from the definition of “covered fund.” First, this definition helps to distinguish the investment activities of venture capital funds from those of hedge funds and private equity funds, which was one of the agencies' primary concerns in declining to adopt an exclusion for venture capital funds in the 2013 rule. Second, this definition includes criteria reflecting the characteristics of venture capital funds that the agencies believe may pose less potential risk to a banking entity sponsoring or investing in venture capital funds and to the financial system—specifically, the smaller role of leverage financing and a lesser degree of interconnectedness with public markets.
While the SEC's regulatory definition in 17 CFR 275.203(
The agencies are considering an additional restriction for which they are seeking specific comment. Under this additional restriction, and notwithstanding 17 CFR 275.203(
A banking entity that serves as a sponsor, investment adviser, or commodity trading advisor to a qualifying venture capital fund would be required to provide the disclosures required under § _.11 (a)(8) to prospective and actual investors in the fund. In addition, any banking entity that relies on the exclusion would not be permitted to, directly or indirectly, guarantee, assume or otherwise insure the obligations or performance of the qualifying venture capital fund. These requirements would promote yet another goal of section 13 of the BHC Act, which was to prevent banking entities from bailing out funds that they sponsor or advise.
A banking entity that serves as a sponsor, investment adviser, or commodity trading advisor to a qualifying venture capital fund also must ensure the fund's activities are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly. Therefore, a banking entity could not rely on this exclusion to sponsor an investment fund that exposes the banking entity to the type of high-risk trading and investment activities that the covered fund provisions of section 13 of the BHC Act were intended to restrict. Further, a banking entity's investment in or relationship with a qualifying venture capital fund would be subject to § _14 (except the banking entity may acquire and retain any ownership interest in the fund in accordance with the terms of the exclusion) and § _.15 of the implementing regulations, as if the fund were a covered fund. These limitations would help to ensure that the risk a banking entity takes on as a result of its investment in or relationship with a qualifying venture capital fund remains appropriately limited. Like the
The agencies believe that qualifying venture capital funds meeting each of these requirements would not raise the type of concerns that were the target of section 13 of the BHC Act. The proposed exclusion, including incorporation of the SEC's regulatory venture capital fund definition in 17 CFR 275.203(
The agencies believe that properly-conducted activities involving these types of venture capital funds could promote and protect the safety and soundness of banking entities and the financial stability of the United States. Qualifying venture capital funds could allow banking entities to diversify their permissible investment activities, and like other exclusions provided in the 2013 rule, allow banking entities to share the costs and risks of their permissible investment activities with third-party investors.
Banking entity investments in qualifying venture capital funds may benefit the broader financial system by improving the flow of financing to small businesses and start-ups and thus may promote and protect the financial stability of the United States. Permitting these types of investments would be consistent with the Treasury Department's June 2017 report, which said such fund investments “can greatly assist in the formation of venture and other capital that is critical to fund economic growth opportunities.”
In addition, it is widely noted that the availability of venture and other financing from funds is not uniform throughout the United States. In particular, it is noted that such funding is generally available on a competitive basis for companies with a significant presence in certain geographic regions (
For all of these reasons, the agencies believe the proposal could promote the benefits of long-term investment that the agencies and Members of Congress have previously recognized, while also addressing the concerns that were the target of the funds prohibition in section 13 of the BHC Act. The agencies are seeking comment on whether to exclude other types of funds that, like qualifying venture capital funds, provide important capital to businesses through long-term investments and do not engage in proprietary trading and other activities that section 13 of the BHC Act was intended to prohibit.
The agencies are requesting comment on the proposal to exclude qualifying venture capital funds from the covered fund definition, in particular:
The agencies are proposing to exclude from the definition of “covered fund” under § _.10(b) of the rule any entity that acts as a “family wealth management vehicle.” The proposed family wealth management vehicle exclusion would be available to an entity that: (1) If organized as a trust, the grantor(s) of the entity are all family customers and, (2) if not organized as a trust, a majority of the voting interests in the entity are owned (directly or indirectly) by family customers; and the entity is owned only by family customers and up to 3 closely related persons of the family customers.
In the 2018 proposal, the agencies requested comment regarding whether the agencies should address the application of Super 23A in the context of family wealth management vehicles. One commenter responded that the agencies should incorporate the exemptions under Section 23A and Regulation W into the definition of “covered transaction.”
Similar to the customer facilitation vehicles discussed below, the agencies believe that the proposed exclusion for family wealth management vehicles would appropriately allow banking entities to structure services or transactions for customers, or to otherwise provide traditional customer-facing banking and asset management services, through a vehicle, even though such a vehicle may rely on section 3(c)(1) or 3(c)(7) of the Investment Company Act or would otherwise be a covered fund under the implementing regulations. The agencies have previously indicated their intent to avoid unintended results that might follow from a definition of “covered fund” that is inappropriately imprecise,
Under the proposed exclusion, a family wealth management vehicle would include any entity that is not, and does not hold itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in securities for resale or other disposition or otherwise trading in securities, provided that: (1) If the entity is a trust, the grantor(s) of the entity are all family customers and, (2) if the entity is not a trust, a majority of the voting interests are owned (directly or indirectly) by family customers and the entity is owned only by family customers and up to 3 closely related persons of the family customers. Under the proposed exclusion, a family customer would mean a family client, as defined in Rule 202(a)(11)(G)-1(d)(4) of the Advisers Act (17 CFR 275.202(a)(11)(G)-1(d)(4)); or any natural person who is a father-in-law, mother-in-law, brother-in-law, sister-in-law, son-in-law or daughter-in-law of a family client, spouse or spousal equivalent of any of the foregoing.
In addition, a banking entity would rely on the proposed exclusion only if the banking entity (or an affiliate): (1) Provides bona fide trust, fiduciary, investment advisory, or commodity trading advisory services to the entity; (2) does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of such entity; (3) complies with the disclosure obligations under § _.11(a)(8), as if such entity were a covered fund;
The agencies are not proposing to apply Super 23A to family wealth management vehicles because, as discussed above, the agencies understand that the application of Super 23A to family wealth management vehicles would prohibit banking entities from providing the full range of banking and asset management services to customers using these vehicles. However, the agencies are proposing to apply the prohibition on purchases of low-quality assets under the Board's regulations implementing section 23A of the Federal Reserve Act (12 CFR 223.15(a)) to help ensure that the exclusion for family wealth management vehicles does not allow banking entities to “bail out” the vehicle.
The agencies believe that the proposed definition of a family wealth management vehicle appropriately distinguishes it from the type of entity that section 13 of the BHC Act intended to capture. The proposed definition would require that a family wealth management vehicle not raise money from investors primarily for the purpose of investing in securities for resale or other disposition or otherwise trading in securities. This aspect of the definition would help to differentiate family wealth management vehicles from covered funds, which raise money from investors for this purpose. Defining “family customer” by building off of the definition of “family client” from rule 202(a)(11)(G)-1(d)(4) of Advisers Act (family office rule) may facilitate compliance by using a definition known in the financial services industry. At the same time, the agencies recognize that the purpose of the family wealth management exclusion differs from the purpose of the family office rule, and should be designed to capture the types of persons and entities to which banking entities have traditionally provided banking and asset management services, as these services do not expose banking entities to the types of risks that section 13 was intended to restrict and would facilitate banking entities' customer-facing financial services. Accordingly, the agencies believe it appropriate to include as “family customers” certain in-laws of the family clients as well as a limited number of persons closely related to the family customers.
The agencies are proposing to exclude from the definition of “covered fund” under § _.10(b) of the rule any issuer that acts as a “customer facilitation vehicle.” The proposed customer facilitation vehicle exclusion would be available for any issuer that is formed by or at the request of a customer of the banking entity for the purpose of providing such customer (which may include one or more affiliates of such customer) with exposure to a transaction, investment strategy, or other service provided by the banking entity. In response to the 2018 proposal, a number of commenters indicated that
The agencies believe that the proposed exclusion for customer facilitation vehicles would appropriately allow banking entities to structure these types of services or transactions for customers, or to otherwise provide traditional customer-facing banking and asset management services, through a vehicle, even though such a vehicle may rely on section 3(c)(1) or 3(c)(7) of the Investment Company Act or would otherwise be a covered fund under the implementing regulations. While neither section 13 nor the implementing regulations would restrict a banking entity from providing these services to a customer directly, commenters have indicated that the broad definition of “covered fund” in the 2013 rule has prevented or otherwise impeded banking entities from providing such services to a customer through vehicles owned or formed by that customer. The agencies have previously indicated their intent to avoid unintended results that might follow from a definition of “covered fund” that is inappropriately imprecise,
The agencies have previously indicated that section 13 permits the agencies to tailor the scope of the definition of covered fund to funds that engage in the investment activities contemplated by section 13 (as opposed, for example, to vehicles that merely serve to facilitate corporate structures).
The proposed exclusion would require that the vehicle be formed by or at the request of the customer. This requirement is intended to help ensure that customer facilitation vehicles are formed to provide customer-oriented financial services, and to differentiate customer facilitation vehicles from covered funds that are organized and offered by the banking entity. This condition would not preclude a banking entity from marketing its services through the use of customer facilitation vehicles or discussing with its customers prior to formation of the customer facilitation vehicle the potential benefits of structuring such services through a vehicle.
A banking entity would be able to rely on the customer facilitation vehicle exclusion only under certain conditions, including that all of the ownership interests of the issuer are owned by the customer (which may include one or more of the customer's affiliates) for whom the issuer was created, other than a
Additional conditions for the customer facilitation vehicle exclusion would include that the banking entity and its affiliates: (1) Do not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or
The agencies believe that, collectively, the conditions on the proposed exclusion should help to ensure that customer facilitation vehicles would be used for customer-oriented financial services provided on arms-length, market terms, and should help to prevent evasion of the requirements of section 13 and the implementing regulations. The agencies also believe that the conditions would be consistent with the purposes of section 13. In addition, these proposed conditions are based on existing conditions in other provisions of the implementing regulations,
The agencies are not proposing to apply Super 23A to customer facilitation vehicles because the agencies understand that the application of Super 23A to customer facilitation vehicles would prohibit banking entities from providing the full range of banking and asset management services to customers using these vehicles. However, the agencies are proposing to apply the prohibition on purchases of low-quality assets under the Board's regulations implementing section 23A of the Federal Reserve Act (12 CFR 223.15(a)) to help ensure that the exclusion for customer facilitation vehicles does not allow banking entities to “bail out” the vehicle.
The agencies are proposing to modify the regulations implementing section 13(f)(1) of the BHC Act to permit banking entities to engage in a limited set of covered transactions with covered funds for which the banking entity directly or indirectly serves as investment manager, investment adviser, or sponsor, or that the banking entity organizes and offers pursuant to section 13(d)(1)(G) of the BHC Act (such funds, related covered funds). Specifically, as described below, the proposal would allow a banking entity to enter into covered transactions with a related covered fund that would be permissible without limit for a state member bank to enter into with an affiliate under section 23A of the Federal Reserve Act. This would include, for example, intraday extensions of credit. The proposal would also allow a banking entity to enter into short-term extensions of credit with, and purchase assets from, a related covered fund in connection with payment, clearing, and settlement activities. These proposed amendments would address certain concerns raised by regulated banking entities and commenters with respect to the impact of section 13(f)(1) on the practical ability of banking entities to organize and offer covered funds as permitted by section 13(d)(1)(G).
Section 13(f)(1) of the BHC Act generally prohibits a banking entity from entering into a transaction with a related covered fund that would be a covered transaction as defined in section 23A of the Federal Reserve Act.
Section 23A of the Federal Reserve Act limits the aggregate amount of covered transactions by a member bank to no more than (1) 10 percent of the capital stock and surplus of the member bank in the case of any one affiliate, and (2) 20 percent of the capital stock and surplus of the member bank in the aggregate with respect to all affiliates.
The agencies addressed the apparent conflict between section 13(f)(1) and particular provisions in section 13(d)(1) of the BHC Act in the 2013 rule by interpreting the statutory language to permit a banking entity “to acquire or retain an ownership interest in a covered fund in accordance with the requirements of section 13.”
In adopting the regulations to reconcile the conflict between paragraphs (d) and (f) of section 13 of the BHC Act, the agencies did not use their rulemaking authority pursuant to section (d)(1)(J).
In the 2018 proposal, the agencies invited comment from the public on the agencies' 2013 interpretation of section 13(f)(1) of the BHC Act,
Several commenters addressed the interpretation of section 13(f)(1) of the BHC Act, and the specific questions asked by the agencies. Several commenters recommended that the agencies interpret section 13(f)(1) to include the exemptions provided under section 23A of the Federal Reserve Act.
Banking entities that sponsor or serve as the investment adviser to covered funds and groups representing such banking entities have argued that the inability to engage in any covered transactions with such funds, particularly those types of transactions that are expressly exempted under section 23A of the Federal Reserve Act and the Board's Regulation W, has limited the services that they or their affiliates can provide.
The agencies believe that, under certain circumstances, it would be appropriate to permit banking entities to enter into certain covered transactions with related covered funds, and therefore are proposing to amend § _.14 of the implementing regulations as described below. The proposed amendments would not modify the definition of “covered transaction” but instead would authorize banking entities to engage in limited activities with related covered funds. Any transactions or activities permitted by these revisions would be required to comply with certain conflict of interest, high-risk, and safety and soundness restrictions.
The proposal would permit a banking entity to engage in covered transactions with a related covered fund that would be exempt from the quantitative limits, collateral requirements, and low-quality asset prohibition under section 23A of the Federal Reserve Act, including transactions that would be exempt pursuant to section 223.42 of the Board's Regulation W.
Notwithstanding the statutory objectives of section 23A of the Federal Reserve Act, however, a member bank may enter into certain “exempt” covered transactions set forth in section 23A of the Federal Reserve Act and the Board's Regulation W, without regard to the quantitative limits, collateral requirements, and low-quality asset prohibition of section 23A and the Board's Regulation W.
In addition, the proposal would permit a banking entity to provide short-term extensions of credit to and purchase assets from a related covered fund, subject to appropriate limits. First, each short-term extension of credit or purchase of assets would have to be made in the ordinary course of business
The agencies expect that the proposed amendments described above would generally promote and protect the safety and soundness of banking entities and U.S. financial stability.
First, allowing banking entities to engage in these limited covered transactions with related covered funds may allow banking entities to reduce operational risk. Currently, the restrictions under section 13(f)(1) of the BHC Act substantially limit the ability of a banking entity to both (1) organize and offer a covered fund, or act as an investment adviser to the covered fund, and (2) provide custody or other services to the fund. As a result, a third party is required to provide other necessary services for the fund's operation, including payment, clearing, and settlement services that are generally provided by the fund's custodian. This increases the potential for problems at the third-party service provider (
Second, the proposed amendments may promote and protect U.S. financial stability by reducing interconnectedness among firms. As described above, the authorized covered transactions would permit banking entities to provide a more comprehensive suite of services to related covered funds, reducing the need to rely on third parties to provide such services.
This proposal would remain subject to additional limitations on transactions with related covered funds. As specified in the statute, such activities would be permissible only “to the extent permitted by any other provision of Federal or state law, and subject to the limitations under section 13(d)(2) of the BHC Act and any restrictions or limitations that the appropriate Federal banking agencies, the Securities and Exchange Commission, and the Commodity Futures Trading Commission, may determine . . .”
Sections _.14(b) and _.14(c) of the regulations implementing section 13 of the BHC Act both generally require that a banking entity may enter into certain transactions specified in section 23B of the Federal Reserve Act (including “covered transactions” as defined in section 23A of the Federal Reserve Act) with related covered funds only on terms and under circumstances that are substantially the same (or at least as favorable) to the banking entity as those prevailing at the time for comparable transactions with or involving other nonaffiliated companies, or in the absence of comparable transactions, on terms and under circumstances that the banking entity in good faith would offer to, or would apply to, nonaffiliated companies.
The agencies are proposing changes to the definition of “ownership interest” to clarify that a debt relationship with a covered fund would typically not constitute an ownership interest under the regulations.
The implementing regulations define an “ownership interest” in a covered fund to mean any equity, partnership, or other similar interest. Some banking entities have expressed concern about the inclusion of the term “other similar interest” in the definition of “ownership interest,” and have indicated that the definition of this term could lead to the inclusion of debt instruments that have standard covenants in the measurement of an ownership interest. Under the 2013 rule, “other similar interest” is defined as an interest that:
• Has the right to participate in the selection or removal of a general partner, managing member, member of the board of directors or trustees, investment manager, investment adviser, or commodity trading advisor of the covered fund (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event);
• Has the right under the terms of the interest to receive a share of the income, gains or profits of the covered fund;
• Has the right to receive the underlying assets of the covered fund after all other interests have been redeemed and/or paid in full (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event);
• Has the right to receive all or a portion of excess spread (the positive difference, if any, between the aggregate interest payments received from the underlying assets of the covered fund and the aggregate interest paid to the holders of other outstanding interests);
• Provides under the terms of the interest that the amounts payable by the covered fund with respect to the interest could be reduced based on losses arising from the underlying assets of the covered fund, such as allocation of losses, write-downs or charge-offs of the outstanding principal balance, or reductions in the amount of interest due and payable on the interest;
• Receives income on a pass-through basis from the covered fund, or has a rate of return that is determined by reference to the performance of the underlying assets of the covered fund; or
• Any synthetic right to have, receive, or be allocated any of the rights above.
This definition focuses on the attributes of the interest and whether it provides a banking entity with economic exposure to the profits and losses of the covered fund, rather than its form. Under the 2013 rule, a debt interest in a covered fund can be an ownership interest if it has the same characteristics as an equity or other ownership interest (
In the 2018 proposal the agencies requested comment on all aspects of the 2013 rule's application to securitization transactions, including the definition of ownership interest. Specifically, the agencies asked whether there were any modifications that should be made to the 2013 rule's definition of ownership interest.
In response to the 2018 proposal, a number of commenters supported the agencies' suggestion to modify § _.6(i)(A) and to expressly permit creditors to participate in the removal of an investment manager for cause, or to nominate or vote on a nominated replacement manager upon an investment manager's resignation or removal without causing an interest to become an ownership interest.
A number of commenters argued that debt interests issued by covered funds and loans to third-party covered funds not advised or managed by a banking entity should be excluded from the definition of ownership interest.
In response to comments received and in order to provide clarity about the types of interests that would be considered within the scope of the definition of ownership interest, the agencies propose to amend the parenthetical in § _.6(i)(A) to specify that creditors' remedies upon the occurrence of an event of default or an acceleration event include the right to participate in the removal of an investment manager for cause or to nominate or vote on a nominated replacement manager upon an investment manager's resignation or removal. Accordingly, an interest that allows its holder to remove an investment manager for cause upon the occurrence of an event of default, for example, would not be considered an ownership interest for this reason alone.
The proposed rule would also provide a safe harbor from the definition of ownership interest, as suggested by some commenters.
(1) The holders of such interest do not receive any profits of the covered fund but may only receive: (i) Interest payments which are not dependent on the performance of the covered fund; and (ii) fixed principal payments on or before a maturity date;
(2) The entitlement to payments on the interest is absolute and may not be reduced because of the losses arising from the covered fund, such as allocation of losses, write-downs or charge-offs of the outstanding principal balance, or reductions in the principal and interest payable; and
(3) The holders of the interest are not entitled to receive the underlying assets of the covered fund after all other interests have been redeemed and/or paid in full (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event).
The agencies believe that the proposed conditions for the safe harbor would provide more clarity and predictability to banking entities and enable them to determine more readily whether an interest would be an ownership interest under the regulations implementing section 13 of the BHC Act. The three conditions under the proposed safe harbor would ensure that debt interests that do not have equity-like characteristics are not considered ownership interests. At the same time, the agencies believe that the conditions are rigorous enough to prevent banking entities from evading the prohibition on acquiring or retaining an ownership interest in a covered fund.
The proposal also would modify the implementing regulations to better align the manner in which a banking entity calculates the aggregate fund limit and covered fund deduction with the manner in which it calculates the per fund limit, as it relates to investments by employees of the banking entity. Specifically, consistent with how investments by employees and directors are treated generally under the existing rule of construction in § _.12(b)(1)(iv), the proposal would modify §§ _.12(c) and _.12(d) to require attribution of amounts paid by an employee or director to acquire a restricted profit interest only when the banking entity has financed the acquisition.
The 2013 rule excludes from the definition of ownership interest certain restricted profit interests.
Section _.12 of the 2013 rule provides different rules for purposes of calculating compliance with the per fund limit and for purposes of calculating compliance with the aggregate fund limit and covered fund deduction. Under the 2013 rule, for purposes of calculating the per fund limit and the aggregate fund limit, a banking entity is attributed ownership interests in a covered fund that are acquired by an employee or director if the banking entity, directly or indirectly, extends financing for the purpose of enabling the employee or director to acquire the ownership interest in the fund, and the financing is used to acquire such ownership interest.
For purposes of calculating the aggregate fund limit and the covered fund deduction, the 2013 rule includes a different calculation with respect to restricted profit interests in a covered fund organized or offered by a banking entity pursuant to paragraph (d)(1)(G).
The 2013 rule requires that a banking entity hold no more than three percent of the total ownership interests of a covered fund that the banking entity organizes and offers pursuant to § _.11 of the 2013 rule.
The 2011 notice of proposed rulemaking included a proposed provision that would have required attribution, under certain circumstances, of certain direct investments by a banking entity alongside, or otherwise in parallel with, a covered fund.
The 2013 rule restricts a banking entity's investment in a covered fund organized and offered pursuant to § _.11 to three percent of the total number or value of the outstanding ownership interests of the fund.
However, in the preamble to the 2013 rule, the agencies went on to discuss the potential for evasion of the per fund limit and aggregate fund limit in the 2013 rule, and stated that “if a banking entity makes investments side by side in substantially the same positions as the covered fund, then the value of such investments shall be included for purposes of determining the value of the banking entity's investment in the covered fund.”
The agencies did not discuss the application of the per fund limit and aggregate fund limit in the context of a banking entity's investments alongside a covered fund in the 2018 proposal. Nonetheless, in response to the 2018 proposal, three commenters recommended that the rule should not impose a limit on parallel investments and noted that this restriction is not reflected in the 2013 rule text.
In light of the comments received, the agencies are proposing to add a new rule of construction to § _.12(b) that would address investments made by banking entities alongside covered funds.
Specifically, proposed § _.12(b)(5) would provide that:
• A banking entity shall not be required to include in the calculation of the investment limits under § _.12(a)(2) any investment the banking entity makes alongside a covered fund as long as the investment is made in compliance with applicable laws and regulations, including applicable safety and soundness standards.
• A banking entity shall not be restricted under § _.12 in the amount of any investment the banking entity makes alongside a covered fund as long as the investment is made in compliance with applicable laws and regulations, including applicable safety and soundness standards.
As discussed in the preamble to the 2013 rule, the agencies recognize that banking entities rely on a number of investment authorities and structures to make investments and meet the needs of their clients and shareholders.
The 2013 rule imposes certain attribution rules and eligibility requirements for investments by directors and employees of a banking entity in covered funds organized and offered by the banking entity. Specifically, § _.12(b)(1)(iv) of the 2013 rule requires attribution of an investment by a director or employee of a banking entity who acquires an ownership interest in his or her personal capacity in a covered fund sponsored by the banking entity if the
The agencies recognize that directors and employees of banking entities may participate in investments alongside a covered fund, for example on an ad hoc basis or as part of a compensation arrangement. Consistent with the agencies' proposed rule of construction regarding direct investments by banking entities alongside a covered fund, the agencies would expect that any direct investments (whether a series of parallel investments or a co-investment) by a director or employee of a banking entity (or an affiliate thereof) made alongside a covered fund in compliance with applicable laws and regulations would not be treated as an investment by the director or employee in the covered fund. Accordingly, such a direct investment would not be attributed to the banking entity as an investment in the covered fund, regardless of whether the banking entity arranged the transaction on behalf of the director or employee or provided financing for the investment.
The proposed rule of construction would not prohibit a banking entity from having investment policies, arrangements or agreements to invest alongside a covered fund in all or substantially all of the investments made by the covered fund or to fund all or any portion of the investment opportunities made available by the covered fund to other investors. Accordingly, a banking entity could market a covered fund it organizes and offers pursuant to § _.11 on the basis of the banking entity's expectation that it would invest in parallel with the covered fund in some or all of the same investments, or the expectation that the banking entity would fund one or more co-investment opportunities made available by the covered fund. The agencies would expect that any such investment policies, arrangements or agreements would ensure that the banking entity has the ability to evaluate each investment on a case-by-case basis to confirm that the banking entity does not make any investment unless the investment complies with applicable laws and regulations, including any applicable safety and soundness standards. The agencies believe that this would further ensure that the banking entity is not exposed to the types of risks that section 13 of the BHC Act was intended to address.
The agencies recognize that the 2011 proposed rule would have required a banking entity to apply the per fund limit and aggregate fund limit to a direct investment alongside a covered fund when, among other things, a banking entity is contractually obligated to make such investment alongside a covered fund. The agencies do not believe such a prohibition is necessary given the agencies' expectation that a banking entity would retain the ability to evaluate each investment on a case-by-case basis to confirm that the banking entity does not make any investment unless the investment complies with applicable laws and regulations, including any applicable safety and soundness standards.
The agencies are proposing five sets of clarifying technical edits to the implementing regulations. Specifically, the agencies are proposing to (1) amend § _.12(b)(1)(ii) to add a comma after the words “SEC-regulated business development companies” in both places where that phrase is used; (2) amend § _.12(b)(4)(i) to replace the phrase “ownership interest of the master fund” with the phrase “ownership interest in the master fund”; (3) amend § _.12(b)(4)(ii) to replace the phrase “ownership interest of the fund” with the phrase “ownership interest in the fund;” (4) amend §§ _.10(c)(3)(i) and _.10(c)(10)(i) to replace the word “comprised” with the word “composed;” and (5) amend § _.10(c)(8)(iv)(A) to replace the word “of” in the phrase “contractual rights of other assets” with the word “or.”
Section 722 of the Gramm-Leach-Bliley Act requires the Federal banking agencies to use plain language in all proposed and final rules published after January 1, 2000.
For example:
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Certain provisions of the proposed rule contain “collection of information” requirements within the meaning of the Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3501-3521). In accordance with the requirements of the PRA, the agencies may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The agencies reviewed the proposed rule and determined that the proposed rule creates new recordkeeping requirements and revises certain disclosure requirements that have been previously cleared under various OMB control numbers. The agencies are proposing to extend for three years, with revision, these information collections. The information collection requirements contained in this joint notice of proposed rulemaking have been submitted by the OCC and FDIC to OMB for review and approval under section 3507(d) of the PRA (44 U.S.C. 3507(d)) and section 1320.11 of the OMB's implementing regulations (5 CFR 1320). The Board reviewed the proposed rule under the authority delegated to the Board by OMB. The Board will submit information collection burden estimates to OMB and the submission will include burden for Federal Reserve-supervised institutions, as well as burden or OCC-, FDIC-, SEC-, and CFTC-supervised institutions under a holding company. The OCC and the FDIC will take burden for banking entities that are not under a holding company.
Comments are invited on:
a. Whether the collections of information are necessary for the proper performance of the agencies' functions, including whether the information has practical utility;
b. The accuracy of the estimates of the burden of the information collections, including the validity of the methodology and assumptions used;
c. Ways to enhance the quality, utility, and clarity of the information to be collected;
d. Ways to minimize the burden of the information collections on respondents, including through the use of automated collection techniques or other forms of information technology; and
e. Estimates of capital or startup costs and costs of operation, maintenance, and purchase of services to provide information.
All comments will become a matter of public record. Comments on aspects of this notice that may affect reporting, recordkeeping, or disclosure requirements and burden estimates should be sent to the addresses listed in the
Section 13 of the BHC Act, which generally prohibits any banking entity from engaging in proprietary trading or from acquiring or retaining an ownership interest in, sponsoring, or having certain relationships with a covered fund, subject to certain exemptions. The exemptions allow certain types of permissible trading activities such as underwriting, market making, and risk-mitigating hedging, among others. The 2013 rule implementing section 13 became effective on April 1, 2014. Section _.20(d) and Appendix A of the 2013 final rule require certain of the largest banking entities to report to the appropriate agency certain quantitative measurements.
The proposed rule contains requirements subject to the PRA and the proposed changes relative to the current final rule are discussed herein. The new recordkeeping requirements are found in section _.10(c)(18)(ii)(B)(1) and the modified disclosure requirements are found in section _.11(a)(8)(i). The modified information collection requirements would implement section 13 of the BHC Act. The respondents are for-profit financial institutions, including small businesses. A covered entity must retain these records for a period that is no less than 5 years in a form that allows it to promptly produce such records to the relevant Agency on request.
Section _.10(c)(18)(ii)(B)(1) would require a banking entity relying on the proposed exclusion from the covered fund definition for customer facilitation vehicles to maintain documentation outlining how the banking entity intends to facilitate the customer's exposure to a transaction, investment strategy, or service. The agencies estimate that the new recordkeeping requirement would be incurred once a
Section _.11(a)(8)(i), which requires banking entities that organize and offer covered funds to make certain disclosures to investors in such funds, would be expanded to also apply to banking entities sponsoring credit funds, venture capital funds, family wealth management vehicles, or customer facilitation vehicles, in reliance on the proposed exclusions for such funds. The agencies estimate that the current average hours per response of 0.1 would increase to 0.5.
Section _.4(c)(3)(i)—0.25 hours for an average of 20 times per year.
Section _.12(e)—20 hours (Initial set-up 50 hours) for an average of 10 times per year.
Section _.20(d)—41 hours (Initial set-up 125 hours) quarterly.
Section _.20(i)—20 hours.
Section _.3(d)(3)—1 hour (Initial set-up 3 hours).
Section _.4(b)(3)(i)(A)—2 hours quarterly.
Section _.4(c)(3)(i)—0.25 hours for an average of 40 times per year.
Section _.5(c)—40 hours (Initial setup 80 hours).
Section _.10(c)(18)(ii)(B)(1)—10 hours.
Section _.11(a)(2)—10 hours.
Section _.20(b)—265 hours (Initial set-up 795 hours).
Section _.20(c)—100 hours (Initial set-up 300 hours).
Section _.20(d)- 10 hours.
Section _.20(e)—200 hours.
Section _.20(f)(1)—8 hours.
Section _.20(f)(2)—40 hours (Initial set-up 100 hours).
Section _.11(a)(8)(i)—0.5 hours for an average of 26 times per year.
• OCC-supervised institutions,
• FDIC-supervised institutions,
• Banking entities for which the CFTC is the primary financial regulatory agency, as defined in section 2(12)(C) of the Dodd-Frank Act, and
• Banking entities for which the SEC is the primary financial regulatory agency, as defined in section 2(12)(B) of the Dodd-Frank Act.
The Regulatory Flexibility Act (“RFA”)
The Board has considered the potential impact of the proposed rule on small entities in accordance with section 603 of the RFA. Based on the Board's analysis, and for the reasons stated below, the Board believes that this proposed rule will not have a significant economic impact on a substantial of number of small entities.
The Board welcomes comment on all aspects of its analysis. In particular, the
As discussed in the
The Board's rule generally applies to state-chartered banks that are members of the Federal Reserve System, bank holding companies, and foreign banking organizations and nonbank financial companies supervised by the Board (collectively, “Board-regulated entities”). However, section 203 of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA),
The Board has not identified any federal statutes or regulations that would duplicate, overlap, or conflict with the proposed revisions, and the Board is not aware of any significant alternatives to the final rule that would reduce the economic impact on Board-regulated small entities.
The OCC certifies that this regulation, if adopted, will not have a significant economic impact on a substantial number of small entities. Accordingly, a Regulatory Flexibility Analysis is not required.
The Regulatory Flexibility Act requires an agency, in connection with a proposed rule, to prepare an Initial Regulatory Flexibility Analysis describing the impact of the proposed rule on small entities, or to certify that the proposed rule would not have a significant economic impact on a substantial number of small entities. For purposes of the Regulatory Flexibility Act, the SBA includes as small entities those with $600 million or less in assets for commercial banks and savings institutions, and $41.5 million or less in assets for trust companies.
The OCC currently supervises approximately 782 small entities.
Under the Economic Growth, Regulatory Relief, and Consumer Protection Act, banking entities with total consolidated assets of $10 billion or less generally are not “banking entities” within the scope of section 13 of the BHC Act if their trading assets and trading liabilities do not exceed 5 percent of their total consolidated assets. In addition, certain trust-only banks are generally not banking entities within the scope of section 13 of the BHC Act. Because there are no OCC-supervised small entities that are banking entities within the scope of section 13 of the BHC Act, the proposal would not impact any OCC-supervised small entities. Therefore, the OCC certifies that the proposal, if implemented, would not have a significant economic impact on a substantial number of small entities.
The RFA generally requires that, in connection with a proposed rulemaking, an agency prepare and make available for public comment an initial regulatory flexibility analysis describing the impact of the proposed rule on small entities.
As of June 30, 2019, the FDIC supervised 3,424 depository institutions,
Section 13 of the BHC Act generally prohibits any banking entity from engaging in proprietary trading or from acquiring or retaining an ownership interest in, sponsoring, or having certain relationships with a covered fund. As previously discussed, the proposed rule would modify existing definitions and exclusions, as well as would introduce new exclusions to the implementing regulations. If adopted, the proposed rule would permit covered entities to engage in additional activities with respect to covered funds, including acquiring or retaining an ownership interest in, sponsoring, or having certain relationships with covered funds, subject to certain restrictions.
This proposed rule would exclude certain types of institutions from the definition of a “covered fund” for the purposes of section 13 of the BHC Act. Investments in funds that are affected by this proposed rule could be reported as deductions from capital on Call Report schedule RCR Part 1 Lines 11 or 13 if the investments qualify as “investments in the capital of an unconsolidated financial institution” or as additional deductions on Lines 17 or 24 of schedule RC-R otherwise.
Based on this supporting information, the FDIC certifies that this rule will not have a significant economic impact on a substantial number of small entities.
Pursuant to 5 U.S.C. 605(b), the SEC hereby certifies that the proposed rule would not, if adopted, have a significant economic impact on a substantial number of small entities.
As discussed in the Supplementary Information, the proposed rule is intended to continue the agencies' efforts to improve and streamline the regulations implementing section 13 of the BHC Act by modifying and clarifying requirements related to the covered fund provisions. To minimize the costs associated with the 2013 rule in a manner consistent with section 13 of the BHC Act, the agencies are proposing to simplify and tailor the rule in a manner that would reduce compliance costs for banking entities subject to section 13 of the BHC Act and the implementing regulations.
The proposed revisions would generally apply to banking entities, including certain SEC-registered entities. These entities include bank-affiliated SEC-registered investment advisers, broker-dealers, and security-based swap dealers. Based on information in filings submitted by these entities, the SEC preliminarily believes that there are no banking entity registered investment advisers or broker-dealers that are small entities for purposes of the RFA. For this reason, the SEC believes that the proposed rule would not, if adopted, have a significant economic impact on a substantial number of small entities.
The SEC encourages written comments regarding this certification. Specifically, the SEC solicits comment as to whether the proposed rule could have an impact on small entities that has not been considered. Commenters should describe the nature of any impact on small entities and provide empirical data to support the extent of such impact.
Pursuant to 5 U.S.C. 605(b), the CFTC hereby certifies that the proposed amendments to the 2013 final rule would not, if adopted, have a significant economic impact on a substantial number of small entities for which the CFTC is the primary financial regulatory agency.
As discussed in this
The proposed revisions would generally apply to banking entities, including certain CFTC-registered entities. These entities include bank-affiliated CFTC-registered swap dealers, futures commission merchants, commodity trading advisors and commodity pool operators.
In the context of the proposed revisions to the implementing regulations, the CFTC believes it is unlikely that a substantial number of the commodity trading advisors that are potentially affected are small entities for purposes of the RFA. In this regard, the CFTC notes that only commodity trading advisors that are registered with the CFTC are covered by the implementing regulations, and generally those that are registered have larger businesses. Similarly, the implementing regulations apply to only those commodity trading advisors that are affiliated with banks, which the CFTC expects are larger businesses. The CFTC requests that commenters address in particular whether any of these commodity trading advisors, or other CFTC registrants covered by the proposed revisions to the implementing regulations, are small entities for purposes of the RFA.
Because the CFTC believes that there are not a substantial number of registered, banking entity-affiliated commodity trading advisors that are small entities for purposes of the RFA,
The CFTC encourages written comments regarding this certification. Specifically, the CFTC solicits comment as to whether the proposed amendments could have a direct impact on small entities that were not considered. Commenters should describe the nature of any impact on small entities and provide empirical data to support the extent of such impact.
Pursuant to section 302(a) of the Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA), 12 U.S.C. 4802(a), in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions, each Federal banking agency must consider, consistent with the principles of safety and soundness and the public interest: (1) Any administrative burdens that the proposed rule would place on depository institutions, including small depository institutions and customers of depository institutions, and (2) the benefits of the proposed rule. In addition, section 302(b) of RCDRIA, 12 U.S.C. 4802(b), requires new regulations and amendments to regulations that impose additional reporting, disclosures, or other new requirements on insured depository institutions generally to take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form. The Federal banking agencies invite any comment that would inform consideration under RCDRIA.
The OCC has analyzed the proposed rule under the factors in the Unfunded Mandates Reform Act of 1995 (UMRA).
The proposed rule does not impose new mandates. Therefore, the OCC finds that the proposed rule does not trigger the UMRA cost threshold. Accordingly, the OCC has not prepared the written statement described in section 202 of the UMRA.
Section 13 of the Bank Holding Company (BHC) Act generally prohibits banking entities from acquiring or retaining an ownership interest in, sponsoring, or having certain relationships with, a hedge fund or private equity fund (covered funds), subject to certain exemptions. Section 13(h)(1) of the BHC Act defines the term “banking entity” to include (i) any insured depository institution (as defined by statute), (ii) any company that controls an insured depository institution, (iii) any company that is treated as a bank holding company for purposes of section 8 of the International Banking Act of 1978, and (iv) any affiliate or subsidiary of such an entity.
Certain SEC-regulated entities, such as broker-dealers, security-based swap dealers (SBSDs), and registered investment advisers (RIAs) affiliated with an insured depository institution, fall under the definition of “banking entity” and are subject to the prohibitions of section 13 of the BHC Act.
Compliance with SBSD registration requirements is not yet required and there are currently no registered SBSDs. However, the SEC has previously estimated that as many as 50 entities may potentially register as SBSDs and that as many as 16 of these entities may already be SEC-registered broker-dealers.
For the purposes of this economic analysis, the term “dealer” generally refers to SEC-registered broker-dealers and SBSDs.
In this proposal, the SEC is soliciting comment on all aspects of the costs and benefits associated with the proposed amendments for SEC registrants, including spillover effects the proposed amendments may have on efficiency, competition, and capital formation in securities markets.
In implementing section 13 of the BHC Act, the agencies sought to increase the safety and soundness of banking entities, promote financial stability, and reduce conflicts of interest between banking entities and their customers.
Section 13 of the BHC Act also provides a number of statutory exemptions to the general prohibitions on proprietary trading and covered funds activities. For example, the statute exempts certain covered funds activities, such as organizing and offering covered funds.
Certain aspects of the implementing regulations may have resulted in a complex and costly compliance regime that is unduly restrictive and burdensome on some affected banking entities.
The proposed amendments include amendments that reduce the scope of entities that may be treated as covered funds (
Broadly, to the extent that the proposed amendments directly change the scope of permissible covered fund activities, and indirectly reduce costs to banking entities and covered funds by reducing uncertainty regarding the scope of permissible activities, the proposed amendments may impact the economic effects of the 2013 rule as amended in 2019.
The proposed amendments may benefit the functioning of the broader capital markets through, for example, increased ability and willingness of banking entities to facilitate capital formation through sponsorship and participation in certain types of funds and to transact with certain groups of counterparties.
The proposed changes, however, may also facilitate risk-taking activities of banking entities. They also may change aspects of the relationships among banking entities and certain other
Moreover, many of the proposed exclusions, such as for credit funds and venture capital funds, would allow banking entities to engage indirectly through fund structures in the same activities in which they are currently permitted to engage directly (
The proposed amendments may also impact competition, allocative efficiency, and capital formation. To the extent that the implementing regulations are currently constraining banking entities in their covered fund activities, including providing traditional banking and asset management services to customers through a legal entity structure, the proposed exclusions from the definition of “covered fund” may increase competition between banking entities and other entities providing services to and otherwise transacting with those types of funds and other entities. Such competition may reduce costs or increase the quality of certain financial services provided to such funds and their counterparties.
Finally, the magnitude of the proposal's costs, benefits, and effects on efficiency, competition, and capital formation is influenced by a variety of factors, including the prevailing macroeconomic conditions, the financial condition of firms seeking to raise capital and of funds seeking to transact with banking entities, competition between bank and non-bank providers of capital, and many others. Moreover, the relative efficiency between fund structures and the direct provision of capital is likely to vary widely among banking entities and funds. The SEC recognizes that the economic effects of the proposed amendments may be dampened or magnified in different phases of the macroeconomic cycle, depend on monetary and fiscal policy developments and other government actions, and vary across different types of banking entities.
The SEC also considered the implications for investors of the proposed amendments. Broadly, the proposed amendments should increase the number of funds and other entities that will be excluded from the covered fund definition. This is likely to result in an increase in offerings of such funds or an increase in banking entities providing services to customers through entities such as client facilitation vehicles and family wealth management vehicles. The ability of investors to access public and private markets through funds and other entities may relax constraints on their portfolio optimization and, thus, enhance the efficiency of their portfolio allocations. The ability of additional investors to access these markets through funds and other entities may also benefit the issuers of the securities held by those funds and other entities by potentially increasing demand for those securities. Increased demand typically results in increased liquidity which can be important to investors as it may enable investors to exit (in a timely manner and at an acceptable price) from their positions in fund instruments, products, and portfolios.
Moreover, investors that seek access to public markets or other markets through foreign public funds may benefit to the extent the proposed amendments would result in banking entities offering more foreign public funds or offering these funds at a lower cost. Further, investors that prefer to implement a trading or investing strategy through a legal entity structure may benefit from the proposed amendments, which would allow banking entities to implement or facilitate such trading or investing strategy while providing other banking and asset management services to the investor. At the same time, higher risk exposures of banking entities sponsoring or investing in more funds that would be excluded from the covered fund provisions by the proposed amendments could adversely affect markets through the impact on financial stability and, therefore, investors. Any such potential effects are expected to be mitigated by the various conditions of the proposed exclusions from the definition of covered fund. For example, the proposed amendments would permit the banking entity to sponsor or invest in certain excluded funds (
The SEC's economic analysis is informed by research
The proposed amendments would tailor, remove, or alter the scope of various covered fund requirements in the 2013 rule. Since section 13 of the BHC Act and the 2013 rule impose a number of different requirements, and, as discussed above, the type and level of risk exposure of a banking entity is the result of a combination of activities,
Importantly, the existing securities markets—including market participants, their business models, market structure, etc.—differ in significant ways from the securities markets that existed prior to enactment of section 13 of the BHC Act and the implementation of the 2013 rule. For example, the role of dealers in intermediating trading activity has changed in important ways, including the following: (1) In recent years, on both an absolute and relative basis, bank dealers generally committed less capital to intermediation activities while non-bank dealers generally committed more, although not always in the same manner or on the same terms as bank dealers; (2) the volume and profitability of certain trading activities after the financial crisis may have decreased for bank dealers while it may have increased for other intermediaries, including non-bank entities that provide intraday liquidity, but generally not overnight liquidity, using sophisticated electronic trading algorithms and high speed access to data and trading venues; and (3) the introduction of alternative credit markets, including non-bank direct lending markets, may have contributed to liquidity fragmentation across markets while potentially increasing access to capital.
Where possible, the SEC has attempted to quantify the costs and benefits expected to result from the proposed amendments. In many cases, however, the SEC is unable to quantify these potential economic effects. Some of the primary economic effects, such as the effect on incentives that may give rise to conflicts of interest in various regulated entities and the degree to which the 2013 rule may be impeding activity of banking entities with respect to certain investment vehicles, are inherently difficult to quantify. Moreover, some of the benefits of the 2013 rule's definitions and prohibitions that the agencies propose to amend, such as the potential benefits for resilience during a crisis or periods of market stress, are less readily observable under strong economic conditions, particularly when markets are less volatile and are functioning well. Further, it is difficult to quantify the net economic effects of any individual proposed amendment because of overlapping implementation periods of various post-crisis regulations affecting the same group of SEC registrants, the long implementation timeline of the 2013 rule and the implementing regulations, and the fact that many market participants changed their behavior in anticipation of future changes in regulation.
In some instances, the SEC lacks the information or data necessary to provide reasonable estimates for the economic effects of the proposed amendments. For example, the SEC lacks information and data on how market participants may choose to restructure their relationships with various types of entities in response to the proposed amendments; the amount of capital formation in covered funds that does not occur because of current covered fund provisions, including those concerning the definition of covered fund, restrictions on relationships with covered funds, the definition of ownership interest, and the exclusion for loan securitizations; the volume of loans, guarantees, securities lending, and derivatives activity dealers may wish to engage in with related covered funds; as well as the extent of risk reduction associated with the covered fund provision of the 2013 rule. Where the SEC cannot quantify the relevant economic effects, they are discussed in qualitative terms.
In the context of this economic analysis, the economic costs and benefits, and the impact of the proposed amendments on efficiency, competition, and capital formation, are considered relative to a baseline that includes the 2013 rule; the 2019 amendments; legislative amendments in EGRRCPA
The economic baseline against which the SEC is assessing the economic impact of the proposed amendments includes the legal and regulatory framework as it exists at the time of this release. Thus, the regulatory baseline for the SEC's economic analysis includes section 13 of the BHC Act as amended by EGRRCPA, and the 2013 rule. Further, the baseline accounts for the fact that since the adoption of the 2013 rule, the agencies have adopted the 2019 amendments, which, among other things, related to the ability of banking entities to engage in certain activities, including underwriting, market-making, and risk-mitigating hedging, with respect to ownership interests in covered funds, as well as amendments conforming the 2013 rule to Sections 203 and 204 of EGRRCPA. In addition, the staffs of the agencies have provided FAQ responses related to the regulatory obligations of banking entities, including SEC-regulated entities that are also banking entities under the 2013 rule, which likely influenced these entities' decisions about how to comply with the 2013 rule.
Although the 2013 rule also included restrictions on proprietary trading and compliance requirements (as modified by the 2019 amendments), the most relevant portion of the 2013 rule for establishing an economic baseline is that involving covered fund restrictions.
The definition of “covered fund” impacts the scope of the substantive prohibitions on banking entities acquiring or retaining an ownership interest in, sponsoring, and having certain relationships with, covered funds. The covered fund provisions of the 2013 rule may reduce the ability and incentives of banking entities to bail out affiliated funds to mitigate reputational risk, limit conflicts of interest with clients, customers, and counterparties, and reduce the ability of banking entities to engage in proprietary trading indirectly through funds. The 2013 rule defines covered funds, in part, as issuers that would be investment companies but for section 3(c)(1) or 3(c)(7) of the Investment Company Act and then excludes specific types of entities from the definition. The definition also includes certain commodity pools as well as certain foreign funds. Funds that rely on the exclusions in sections 3(c)(1) or 3(c)(7) of the Investment Company Act are covered funds unless an exclusion from the covered fund definition is available. Funds that rely on any exclusion or exemption from the definition of “investment company” under the Investment Company Act, other than the exclusion contained in section 3(c)(1) or 3(c)(7), such as real estate and mortgage funds that rely on the exclusion in section 3(c)(5)(C), are not covered funds under the 2013 rule.
The broad definition of covered funds encompasses many different types of vehicles, and the 2013 rule excludes some of them from the definition of a covered fund.
Under the baseline, banking entities are limited in the types of transactions in which they are able to engage with covered funds with which they have certain relationships. Banking entities that serve, directly or indirectly, as the investment manager, adviser, or sponsor to a covered fund are prohibited from engaging in a “covered transaction,” as defined in section 23A of the Federal Reserve Act, with the covered fund or with any other covered fund that is controlled by such covered fund.
For foreign banking entities,
The 2013 rule prohibits a banking entity, as principal, from directly or indirectly acquiring or retaining an “ownership interest” in a covered fund.
(A) Has the right to participate in the selection or removal of a general partner, managing member, member of the board of directors or trustees, investment manager, investment adviser, or commodity trading advisor of the covered fund (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event);
(B) Has the right under the terms of the interest to receive a share of the income, gains or profits of the covered fund;
(C) Has the right to receive the underlying assets of the covered fund after all other interests have been redeemed and/or paid in full (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event);
(D) Has the right to receive all or a portion of excess spread (the positive difference, if any, between the aggregate interest payments received from the underlying assets of the covered fund and the aggregate interest paid to the holders of other outstanding interests);
(E) Provides under the terms of the interest that the amounts payable by the covered fund with respect to the interest could be reduced based on losses arising from the underlying assets of the covered fund, such as allocation of losses, write-downs or charge-offs of the outstanding principal balance, or reductions in the amount of interest due and payable on the interest;
(F) Receives income on a pass-through basis from the covered fund, or has a rate of return that is determined by reference to the performance of the underlying assets of the covered fund; or
(G) Any synthetic right to have, receive, or be allocated any of the rights above.
The 2013 rule permits a banking entity to acquire and retain an ownership interest in a covered fund that the banking entity organizes and offers pursuant to section _.11, but limits such ownership interests to three percent of the total number or value of the outstanding ownership interests of such fund (the per-fund limit).
As discussed above, section 13 of the BHC Act provides a rule of construction that explicitly allows the sale and securitization of loans as otherwise permitted by law.
Under the 2013 rule, issuers in the business of making investments that are designed primarily to promote the public welfare, of the type permitted under paragraph (11) of section 5136 of the Revised Statutes of the United States (12 U.S.C. 24),
As discussed above, the 2013 rule includes a per fund limit and aggregate fund limit on a banking entity's ownership of covered funds that the banking entity organizes and offers.
For purposes of calculating the aggregate fund limit and capital deduction requirement, the 2013 rule requires attribution to a banking entity with respect to restricted profit interests in a covered fund for which the banking entity serves as investment manager, investment adviser, commodity trading advisor, or other service provider.
The sections that follow discuss rule provisions currently in effect, how each proposed amendment would change those provisions, and the anticipated costs and benefits of the proposed amendments, subject to the caveat that not all anticipated costs and benefits can be meaningfully quantified.
The SEC-regulated entities directly affected by the proposed amendments include broker-dealers, security-based swap dealers, and investment advisers. The 2013 rule, as amended in 2019, imposed a range of restrictions and compliance obligations on banking entities with respect to their covered fund activities and investments. To the degree that the proposed amendments reduce or otherwise alter the scope of private funds subject to covered fund restrictions, SEC-registered banking entities, including broker-dealers, security-based swap dealers, and investment advisers may be affected by the proposal.
Under the 2013 rule, some of the largest SEC-regulated broker-dealers are banking entities. Table 1 reports the number, total assets, and holdings of broker-dealers affiliated with banks and broker-dealers that are not.
While the 3,504 domestic broker-dealers that are not affiliated with banks greatly outnumber the 198 banking entity broker-dealers subject to the 2013 rule, banking entity broker-dealers dominate non-banking entity broker-dealers in terms of total assets (73% of total broker-dealer assets) and aggregate holdings (68% of total broker-dealer holdings).
The proposed
Importantly, because registration is not yet required, compliance with capital and other substantive requirements for SBSDs under Title VII of the Dodd-Frank Act is also not yet required.
This section describes RIAs advising private funds that may be affected by the proposed amendments. Using Form ADV data, Table 2 reports the number of RIAs advising private funds by fund type, as those types are defined in Form ADV.
Banking entity RIAs advise a total of 4,274 private funds with approximately $1.97 trillion in gross assets. From Form ADV data, banking entity RIAs' gross private fund assets under management are concentrated in hedge funds and private equity funds. The SEC estimates on the basis of this data that banking entity RIAs advise 879 hedge funds with approximately $668 billion in gross assets and 1,430 private equity funds with approximately
In addition, the SEC's economic analysis is informed by private fund statistics submitted by certain RIAs of private funds through Form PF as summarized in quarterly “Private Fund Statistics.”
The baseline also reflects the potential that a registered investment company (RIC) or a business development company (BDC) would be treated as a banking entity where the RIC or BDC's sponsor is a banking entity that holds 25% or more of the RIC or BDC's voting securities after a seeding period.
Small business investment companies (SBICs) are generally “privately owned and managed investment funds, licensed and regulated by the Small Business Administration (SBA), that use their own capital plus funds borrowed with an SBA guarantee to make equity and debt investments in qualifying small businesses.”
Pursuant to Advisers Act section 203(b)(7), an SBIC is (other than an entity that has elected to be regulated or is regulated as a business development company pursuant to section 54 of the Investment Company Act of 1940): (A) A small business investment company that is licensed under the Small Business Investment Act of 1958 (“SBIA”), (B) an entity that has received from the Small Business Administration notice to proceed to qualify for a license as a small business investment company under the SBIA, which notice or license has not been revoked, or (C) an applicant that is affiliated with 1 or more licensed small business investment companies described in subparagraph (A) and that has applied for another license under the SBIA, which application remains pending.
The agencies are requesting comment on whether they should provide relief to rural business investment companies (“RBICs”) from the 2013 rule that is similar to the relief provided to SBICs.
The Tax Cuts and Jobs Act established the “opportunity zone” program to provide tax incentives for long-term investing in designated economically distressed communities.
Section 13 of the BHC Act generally prohibits banking entities from acquiring or retaining an ownership interest in, sponsoring, or having certain relationships with covered funds, subject to certain exemptions.
As discussed below, careful consideration was given to the competing effects that could potentially result from the proposed amendments and alternatives. For example, the proposed amendments could result in enhanced competition among, and capital formation driven by, entities that would be treated as covered funds under the 2013 rule. The proposed amendments could also potentially increase (or decrease) moral hazard and other financial risks posed by investments in covered funds; however, the agencies have sought to mitigate the potential for increased risk and other concerns by imposing various conditions on the proposed exclusions designed to address such risks. To the extent that the current covered fund provisions limit fund formation, the proposed amendments and other amendments on which the agencies seek comment could provide greater ability for banking entities to organize funds and attract capital from third party investors, which could increase revenues for banking entities while reducing long-term compliance costs; increase the availability of venture, credit, and other financing, including for small businesses and start-ups; and, as a result, increase capital formation. The SEC is not currently aware of any information or data that would allow a quantification of the extent to which the covered fund provisions of the 2013 rule are inhibiting capital formation via funds. Therefore, the bulk of the analysis below is necessarily qualitative. To the extent that the current covered fund provisions limit alignment of interests between banking entities and their clients, customers, or counterparties, and to the extent the proposed amendments would alter the alignment of interests, the proposed amendments could have a positive or negative effect on conflict of interest concerns.
The proposed amendments create new recordkeeping requirements and revise certain disclosure requirements. Specifically, a banking entity may only rely on the exclusion for customer
Initial recordkeeping burdens: (10 hours) × (255 entities) × (Attorney at $423 per hour) = $1,078,650.
As discussed elsewhere in this
Broadly, such modifications reduce the number and types of funds that are within the scope of the 2013 rule, impacting the economic effects of section 13 of the BHC Act and the 2013 rule.
Form ADV data is not sufficiently granular to allow the SEC to estimate the number of funds and fund advisers affected by the different proposed exclusions from the covered fund definition and other relief on which the agencies are seeking comment. However, Table 2 and Table 3 in the economic baseline quantify the number and asset size of private funds advised by banking entity RIAs by the type of private fund they advise, as those fund types are defined in Form ADV.
Using Form ADV data, the SEC preliminarily estimates that approximately 149 banking entity RIAs advise hedge funds and 96 banking entity RIAs advise private equity funds (as those terms are defined in Form ADV).
As noted elsewhere in this
The proposed amendments could reduce the scope of funds that need to be analyzed for covered fund status or could simplify this analysis and enable banking entities to own, sponsor, and have relationships with the types of entities that the proposed amendments would exclude from the covered fund definition. Accordingly, the proposed amendments may reduce costs of banking entity ownership in, sponsorship of, and transactions with certain funds; may promote greater capital formation in, and competition among such funds; and may improve access to capital for issuers of underlying debt or equity that possibly will be purchased by those funds.
The proposed amendments may also benefit banking entity dealers through higher profits or greater demand for derivatives, margin, payment, clearing, and settlement services. Reducing
The sections that follow further discuss these possible overarching economic costs, benefits, and effects of competition, efficiency, and capital formation with respect to specific types of funds and proposed amendments.
Under the baseline, foreign excluded funds are excluded from the covered fund definition, but could be considered banking entities if a foreign banking entity controls the foreign fund in certain circumstances. As discussed above, the federal banking agencies released a policy statement on July 17, 2019, which provides that the federal banking agencies would not propose to take action during the two-year period ending on July 21, 2021 (i) against a foreign banking entity based on attribution of the activities and investments of a qualifying foreign excluded fund to the foreign banking entity
The SEC recognizes that failing to exclude such funds from the definition of “banking entity” in the 2013 rule imposes proprietary trading restrictions, covered fund prohibitions, and compliance obligations on qualifying foreign excluded funds that may be more burdensome than the requirements that would apply under the 2013 rule to covered funds. The SEC has also received comment opposing carving out qualifying foreign excluded funds from the definition of banking entity.
The proposed amendments may increase the incentive for some foreign banking entities seeking to organize and offer qualifying foreign excluded funds to reorganize their activities so that these funds' activities qualify for the proposed exemptions. The costs and feasibility of such reorganization will depend on the complexity and existing compliance structures for banking entities, the degree to which there is unmet demand for investment funds that may be organized as qualifying foreign excluded funds, and the profitability of such banking activities. Importantly, the principal risk of foreign banking entities' activities related to foreign excluded funds generally resides outside the United States and is unlikely to affect negatively the safety and soundness of U.S. banking entities or systemic risk to the U.S. financial system.
The 2013 rule excludes from the covered fund definition any foreign public fund that satisfies three sets of conditions. First, the issuer must be organized or established outside of the United States, be authorized to offer and sell ownership interests to retail investors in the issuer's home jurisdiction (the “home jurisdiction” requirement), and sell ownership interests predominantly through one or more public offerings outside of the United States. Second, for funds that are sponsored by a U.S. banking entity, or by a banking entity controlled by a U.S. banking entity, the ownership interests in the issuer must be sold “predominantly” (the “predominantly” requirement) to persons other than the sponsoring banking entity, the issuer, their affiliates, directors of such entities, or employees of such entities (the employee sales limitation). Third, such public offerings must occur outside the United States, must comply with applicable jurisdictional requirements, may not restrict availability to investors having a minimum level of net worth or net investment assets, and must have publicly available offering disclosure documents filed or submitted with the relevant jurisdiction.
The proposed amendments would make five changes to the foreign public fund exclusion. First, the proposal would remove the home jurisdiction requirement.
The SEC has received comments indicating that the foreign public fund exclusion under the 2013 rule is impractical, overly narrow, and prescriptive, and results in competitive disparities between foreign public funds and RICs.
The SEC has received comment that the home jurisdiction requirement under the 2013 rule is narrow and fails to recognize the prevalence of non-U.S. retail funds organized in one jurisdiction and authorized to sell interests in other jurisdictions.
The SEC has also received comment that the “predominantly” requirement has been burdensome and poses significant compliance burdens.
The proposed amendments to the foreign public funds provisions tailor the scope of disclosure and compliance obligations for those jurisdictions where ownership interests are sold in recognition of the prevalence of foreign retail fund sales across jurisdictions. Similarly, the proposal would limit the compliance obligation to settings in which the banking entity serves as the investment manager, investment adviser, commodity trading advisor, commodity pool operator, or sponsor—settings that may involve greater conflicts of interest between banking entities and fund investors.
The proposed amendments also would replace the employee sales limitation with a limitation on sales to senior officers.
The agencies could have proposed a variety of alternatives offering more or less relief with respect to foreign public funds. For example, the agencies could have proposed eliminating altogether the limit on sales to affiliated entities, directors and employees, which would have provided even greater alignment of treatment between foreign public funds and RICs.
Under the baseline, funds that raise capital to engage in loan originations or extensions of credit or purchase and hold debt instruments that a banking entity would be permitted to acquire directly may be “covered funds” under the 2013 rule. As a result, banking entities currently face limitations on sponsoring or investing in credit funds that engage in traditional banking activities—activities that banking entities are able to engage in directly outside of the fund structure. Banking entities may also be restricted in their relationships with credit funds that are related covered funds, as well as in their underwriting and market making activities relating to such funds. The proposal would create a separate exclusion from the covered fund definition for credit funds that meet certain conditions, including several conditions that are similar to certain conditions of the loan securitization exclusion, but that reflect the structure and operation of credit funds.
Credit funds are likely to carry similar returns and risks as direct extensions of
Another commenter indicated that debt instruments are generally held for the purpose of generating income, which may come both from interest and price appreciation, whether held directly on a banking entity's balance sheet or indirectly through a fund structure.
Further, commenters have stated that some RICs and BDCs may engage in similar investment activities as credit funds.
The SEC preliminarily believes that the proposed credit fund exclusion may allow banking entities to engage, indirectly, in more loan origination and traditional extension of credit relative to the current baseline. To the degree that banking entities are currently constrained in their ability to engage in extension of credit through credit funds because of the 2013 rule, the proposed exclusion may increase the volume of intermediation of credit by banking entities and make it more efficient and less costly. In addition, permitting banking entities to extend financing to businesses through credit funds could allow banking entities to compete more effectively with non-banking entities that are not subject to the same prudential regulation or supervision as banking entities subject to section 13 of the BHC Act and thereby likely result in an increase in lending activity in banking entity-sponsored credit funds without negatively affecting capital formation or the availability of financing. In this respect, the proposed amendments could result in greater competition between bank and non-bank provision of credit with both expected lower costs that typically result from increased competition and a larger volume of permissible banking and financial activities to occur in the regulated banking system. In addition, since cost reductions and increased efficiencies are commonly passed along to customers, the proposed exclusion may also benefit banking entities' borrowers and facilitate the extension of credit in the real economy.
The SEC continues to recognize that banking entities already engage in a variety of permissible activities involving risk, including extensions of credit, underwriting, and market-making. To the degree that credit funds may enable greater formation of capital by banking entities through various debt instruments, this may influence the risks and returns of banking entities individually and of banking entities as a whole. However, the SEC recognizes that the activities of credit funds largely replicate permissible and traditional activities of banking entities. Moreover, banking entities subject to the 2013 rule may also be subject to multiple prudential, capital, margin, and liquidity requirements that facilitate the safety and soundness of banking entities and promote the financial stability of the United States. In addition, the proposed amendments include a set of conditions on the credit fund exclusion, including limitations on banking entities' guarantees, assumption or other insurance of the obligations or performance of the fund,
Importantly, extensions of credit and loan origination by banking entities, whether directly or indirectly, are influenced by a wide variety of factors, including the prevailing macroeconomic conditions, the creditworthiness of borrowers and potential borrowers, competition between bank and non-bank credit providers, and many others. Moreover, the efficiencies of credit funds relative to direct extensions of credit described above are likely to vary considerably among banking entities and funds. The SEC recognizes that the potential effects described above of the proposed credit fund exclusion may be dampened or magnified in different phases of the macroeconomic cycle and across various types of banking entities.
As an alternative to the proposed amendment, the agencies could have proposed a credit fund exclusion that imposes additional restrictions. For example, as discussed above, the agencies could have imposed a quantitative limit on the amount of equity securities (or rights to acquire equity securities) that a credit fund may acquire in connection with its loans or debt instruments, rather than to require only that such securities and rights be received on customary terms. The SEC understands that in certain circumstances it is customary for lenders to receive a limited amount of warrants issued by the borrower or its affiliate in connection with certain extensions of credit, and that such a structure (
As discussed elsewhere in this
A qualifying venture capital fund would be an issuer that, among other criteria, is a venture capital fund as defined in 17 CFR 275.203(l)-1.
A number of commenters supported an exclusion for venture capital funds and stated that venture capital funds do not commonly engage in short-term, high-risk activities, and that, by their nature, venture capital funds make long-term investments in private firms.
In addition, it is widely noted that the availability of venture capital and other financing from funds is not uniform throughout the United States and is generally available on a competitive basis for companies with a significant presence in certain geographic regions (
The SEC remains cognizant of the fact that the overall level and structure of activities of banking entities that involve risk stems from a variety of permissible sources, including traditional capital provision, underwriting, and market-making. To the degree that qualifying venture capital funds may enable greater formation of capital by banking entities, this may influence the risks and returns of such entities individually and of banking entities as a whole. However, the proposed exclusion has a number of conditions, including a prohibition on direct or indirect guarantees by the banking entity, disclosures to investors, and compliance with applicable safety and soundness standards.
The SEC has also received comment opposing any exclusion for venture capital funds.
As an alternative to the proposed amendment, the agencies are considering an additional restriction for which they are seeking specific comment. Under this additional restriction, and notwithstanding 17 CFR 275.203(1)-1(a)(2), the venture capital fund exclusion would be limited to funds that do not invest in companies that, at the time of the investment, have more than a limited dollar amount of total annual revenue. The agencies are considering what specific threshold would be appropriate to differentiate venture capital funds from other types of private funds. The potential benefit of including a revenue or other similar test is that it could be more difficult for
Such an additional restriction as contemplated in the alternative would make it more difficult for banking entities to sponsor and invest in venture capital funds by limiting the pool of possible investments permitted for venture capital funds that qualify for the exclusion. This difficulty may be particularly pronounced for banking entities that would use the proposed venture capital fund exclusion to make investments in third-party venture capital funds, which may not be willing to restrict—and could be prohibited from restricting under other applicable laws—the fund's investments in companies that meet any such additional revenue or other similar test. As a result, such an additional condition could diminish the benefits discussed above, both by limiting the utility of the exclusion for banking entities to make permissible long-term investments and potentially reducing the availability of financing for businesses, including small businesses and start-ups in areas outside of certain major metropolitan areas.
The 2013 rule excludes from the covered fund definition small business investment companies (SBICs). The 2013 rule includes within the scope of the exclusion SBICs and issuers that have received notice to proceed to qualify for a license as an SBIC and which have not received a revocation of the notice or license. The proposal would expand the exclusion to incorporate SBICs that have voluntarily surrendered their licenses to operate and do not make new investments (other than investments in cash equivalents) after such voluntary surrender.
Clarifying that SBICs that have voluntarily surrendered their licenses and are winding-down remain excluded from the covered fund definition would eliminate regulatory uncertainty for banking entities. Currently, because it is unclear whether an SBIC that has voluntarily surrendered its license is still excluded from the definition of “covered fund,” banking entities must make a determination whether or not the SBIC that is winding-down is a covered fund. If the banking entity determines that when the SBIC that is winding-down and has voluntarily surrendered its license no longer qualifies for the exclusion from the covered fund definition, then the 2013 rule applies and the banking entity's existing investment in, and relationship with, the SBIC is prohibited. This potential result may discourage banking entities from making investments in SBICs.
The SEC has received comment that the 2013 rule is limiting banking entity activities in SBICs that may spur economic growth, and that banking entities face significant regulatory burdens that are not commensurate with the risk of the underlying activities.
SBICs are an important mechanism for capital allocation by banking entities and one important channel of capital raising for issuers. The proposed amendment would clarify that banking entities are able to continue to participate in SBIC-related activities during the dissolution of such funds, as long as certain conditions are met. To the degree that banking entities may currently be reluctant to invest in SBICs to avoid the risk of an SBIC being treated as a covered fund during SBIC dissolution, the proposal may increase the willingness of some banking entities to participate in SBICs. The proposed amendment would require that SBICs that have voluntarily surrendered their license may not make new investments during the wind-down process. This aspect of the proposed amendment seeks to address the possibility of banking entities becoming exposed to greater risk as part of their participation in SBICs during their wind-down process, even though such exposure may not be common in an SBIC's ordinary course of business. In any case, both the risks and the returns arising out of banking entity investments in SBICs at all stages of the vehicle's lifecycle are likely to flow through to banking entity shareholders. Moreover, banking entities participating in SBICs would remain subject to applicable safety and soundness regulations and requirements.
Similarly, as discussed elsewhere in this
The agencies are requesting comment on providing a separate specific exclusion for RBICs, similar to the separate, specific exclusion for SBICs.
RBICs may already be excluded from the definition of covered fund under the 2013 rule.
The agencies are also requesting comment on providing a specific exclusion for QOFs. As discussed above, the program allows taxpayers to defer and reduce taxes on capital gains by reinvesting gains in QOFs that are required to have at least 90 percent of their assets in designated low-income zones. In this regard, QOFs are similar to SBICs and public welfare companies. The alternative could expand the economic effects of the proposed amendments to the SBIC exclusion and public welfare exclusion discussed above, and may facilitate capital formation by banking entities.
QOFs may already be excluded from the definition of covered fund under the 2013 rule. For example, QOFs may qualify for the public welfare exclusion under the 2013 rule or an exclusion or exemption from the definition of “investment company” under the Investment Company Act other than section 3(c)(1) or 3(c)(7), such as section 3(c)(5)(C).
As discussed above, the proposed amendments would exclude from the covered fund definition certain family wealth management vehicles. Family wealth management vehicles commonly engage in asset management activities, as well as estate planning and other related activities.
The SEC recognizes that some banking entities may respond to the proposed exclusion by seeking to structure other entities as family wealth management vehicles. However, as discussed in detail above, the proposed exclusion would only be available under a number of conditions. Specifically, if the entity is a trust, the grantor(s) of the entity must all be family customers; if the entity is not a trust, a majority of the voting interests in the entity must be owned by family customers, and the entity must be owned only by family customers and up to 3 closely related persons of the family customers.
The proposed definition of “family customer” would include any “family client” as defined in Rule 202(a)(11)(G)-1(d)(4) of the Investment Advisers Act of 1940, and any natural person who is a father-in-law, mother-in-law, brother-in-law, sister-in-law, son-in-law or daughter-in-law of a family client, or a spouse or a spousal equivalent of any of the foregoing.
Alternative forms of relief with respect to family wealth management vehicles—for example, alternatives that define “family customers” more broadly or narrowly, or alternatives removing some of the proposed conditions for the exclusion—would increase or reduce the availability of the exclusion relative to the proposal. Alternatively, the agencies could have proposed amending the limitations on relationships with a covered fund to permit banking entity transactions with family wealth management vehicles that would otherwise be considered covered transactions (
The proposal would also exclude from the covered fund definition issuers acting as customer facilitation vehicles. The SEC understands that banking entities commonly use special purpose vehicles to accommodate exposure to securities, transactions, and services of a client or group of affiliated clients.
At the same time, financial services related to customer facilitation vehicles may involve market risk, and the proposed exclusion may enable banking entities to provide a greater array of financial services to, and otherwise transact with, such vehicles. The SEC preliminarily believes that such risks may be mitigated by at least two of the proposed conditions of the proposed exclusion. First, a banking entity and its affiliates can hold only a
The proposed amendments create new recordkeeping requirements for a banking entity that relies on the exclusion for customer facilitation vehicles.
The agencies could have proposed alternative forms of relief with respect to customer facilitation vehicles. For example, the agencies could have proposed a higher banking entity ownership limit (of, for example, 5% or 10%). Alternatively, the agencies could have proposed a 0.5% ownership interest limit, but without specifying a list of purposes for which such interest may be held, leading to banking entities accumulating greater ownership interests in such vehicles. As another example, the agencies could have proposed an exclusion for customer facilitation vehicles without subjecting the banking entity relying on the exclusion to 12 CFR 223.15(a) or section 23B of the Federal Reserve Act, as if such banking entity were a member bank and such customer facilitation vehicles were an affiliate thereof. Such alternatives would remove or loosen the conditions for the availability of the exclusion, which may increase the risk that customer facilitation vehicles could be used for evasion purposes or expose banking entities to additional risk, but could also further reduce compliance burdens and provide greater flexibility to banking entities and their customers.
As discussed above, under the 2013 rule, banking entities that either: (1) Serve as a sponsor, adviser, or manager of a covered fund; (2) organize and offer
The SEC has received comments suggesting that section 13(f)(1) of the BHC Act should be interpreted to include the exemptions provided under section 23A of the Federal Reserve Act, and that banking entities should be permitted to engage in a limited amount of covered transactions with related covered funds.
The proposed amendments may increase banking entities' ability to engage in custody, clearing, and other transactions with related covered funds and benefit banking entities that are currently unable to engage in otherwise profitable or efficient activities with related covered funds. Moreover, this may enhance operational efficiency and reduce operational risks and costs incurred by covered funds, which are currently unable to rely on banking entities with which they have certain relationships for custody, clearing, and other transactions.
The SEC has also received a comment opposing incorporating the Federal Reserve Act section 23A exemptions or quantitative limits.
The agencies could have proposed broader or narrower forms of relief. For example, in addition to the proposed relief, the agencies could have proposed permitting banking entities to engage in additional covered transactions in connection with payment, clearing, and settlement services beyond extensions of credit and purchases of assets. Further, under the proposal, each extension of credit would be required to be repaid, sold, or terminated by the end of 5 business days.
As discussed above, the 2013 rule defines “ownership interest” in a covered fund to mean any equity, partnership, or “other similar interest,” which is an interest that exhibits any of several characteristics.
Second, the proposed amendment would add to the list of interests that are excluded from the definition of ownership interest. Specifically, the proposed amendment would provide that any senior loan or senior debt interest would not be an ownership interest, if such senior loan or senior debt interest had specific characteristics.
The SEC has received comment that the 2013 rule's definition of ownership interest captures instruments that do not have equity-like features and constrains banking entity investments in debt securitizations and client facilitation services.
The SEC recognizes that banking entities may have contractual rights to participate in the selection or removal of a general partner, managing member, or member of the board of directors or trustees of their borrower that are not limited to the exercise of a remedy upon an event of default or other default event.
The SEC recognizes that such debt instrument investments carry risk,
The agencies could have proposed broader relief by limiting the particular forms of a banking entity's interest (
As discussed above, the 2013 rule excludes from the definition of covered fund any loan securitization that issues asset-backed securities, holds only loans, certain rights and assets, and a small set of other financial instruments (permissible assets), and meets other criteria.
The staffs of the agencies released a frequently asked question addressing the servicing asset provision of the loan securitization exclusion in June 2014.
The agencies are also proposing to allow loan securitizations to hold up to five percent of the entity's assets in non-
The agencies could have proposed expanding the types of permissible assets beyond what is described in the 2013 rule and the Loan Securitization Servicing FAQ. For example, the agencies could have proposed expanding the range of permissible assets in an excluded loan securitization. Such alternatives could potentially allow banking entities to incorporate into securitizations corporate bonds, interests in letters of credit, cash and short-term highly liquid investments, derivatives, and senior secured bonds that do not significantly change the nature and risk profile of the securitization.
However, the SEC recognizes that the loan securitization industry may have evolved since the issuance of the 2013 rule. As a result, the SEC preliminarily believes that, even if the scope of non-loan assets permitted to be held were expanded, loan securitization issuers may continue to exclude non-loan assets from securitizations. Further, such an alternative would not affect the applicable prudential requirements aimed at safety and soundness of banking entities. Banking entities currently take on a variety of risks arising out of a broad range of permissible activities, including the core traditional banking activity related to the extension of credit and direct and indirect extension of credit by banking entities flows through to the real economy in the form of greater access to capital.
As discussed above, the preamble to the 2013 rule stated that if a banking entity makes investments side by side in substantially the same positions as a covered fund, then the value of such investments would be included for the purposes of determining the value of the banking entity's investment in the covered fund.
In response to the 2018 proposal, the agencies received comments that argued the implementing regulations should not impose a limit on parallel investments and noted that such a restriction is not reflected in the text of the 2013 rule.
The SEC recognizes that the proposed approach may increase the risk that some banking entities may seek to use parallel investments for the purpose of artificially maintaining or increasing the value of the assets of a fund that is organized and offered by the banking entity. Supporting a fund in such a manner would increase these banking entities' exposures to the fund's assets and would generally be inconsistent with the 2013 rule's restriction on a banking entity guaranteeing, assuming, or otherwise insuring the obligations or performance of such a covered fund.
Further, as stated above, the agencies would expect that any investments made alongside a covered fund by a director or employee of a banking entity or its affiliate, if made in compliance with applicable laws and regulations, would not be treated as an investment by the director or employee in the covered fund.
The SEC recognizes, however, that a restriction on investments made alongside a covered fund may interfere with banking entities' ability to make otherwise permissible investments directly on their balance sheets.
As discussed above, the proposed amendments would exclude certain groups of private funds and other entities from the scope of the covered fund definition and modify other covered fund restrictions applicable to banking entities subject to the implementing regulations. Moreover, the proposed amendments would reduce compliance obligations of banking entities subject to the implementing regulations. The SEC preliminarily believes that the proposed amendments may impact competition, capital formation, and allocative efficiency.
The proposed amendments may have three groups of competitive effects. First, the proposed amendments may make it easier for bank affiliated broker-dealers, SBSDs, and RIAs to compete with bank unaffiliated broker-dealers, SBSDs, and RIAs in their activities with certain groups of private funds and other entities. Second, the proposal may reduce competitive disparities between banking entities subject to the implementing regulations and affected by the proposed amendments, and banking entities that are not. Third, certain aspects of the proposed amendments (such as the amendments related to foreign excluded funds and foreign public funds) may reduce competitive disparities between U.S. banking entities and foreign banking entities in their covered fund activities. Because competition may reduce costs or increase quality, and because some affected banking entities may face economies of scale or scope in the provision of services to certain private funds, these competitive effects may flow through to customers, clients, and investors in the form of reduced transaction costs and greater quality of private fund and other offerings and related financial services.
The proposed amendments may also impact capital formation. For example, by reducing the scope of application of covered fund restrictions in the implementing regulations, the proposal relaxes restrictions related to banking entity underwriting and market-making of certain private funds. Moreover, the proposal would amend certain restrictions related to banking entity relationships with certain covered funds. Further, as discussed above, many of the proposed amendments would enable banking entities to engage indirectly (through a fund structure) in certain of the same activities that they are currently able to engage in directly (extending credit or direct ownership stakes). To the degree that the implementing regulations impede or otherwise constrain banking entity activities in such funds, the proposed amendments may result in a greater number of such private funds being launched by banking entities, increasing capital formation via private funds. The effects of the proposed amendments on capital formation are likely to flow through to investors (in the form of greater availability or variety or private funds available for investors) as well as to firms seeking to raise capital or obtain financing from private funds.
The possible effects of the proposed amendments on allocative efficiency are related to the proposal's likely impacts on capital formation. Specifically, as discussed above, the SEC preliminarily believes that the proposed amendments may result in a greater number and variety of private funds launched by banking entities. To the degree that banking entities may be able to provide superior private funds due to their expertise or economies of scale or scope, and to the degree that fund structures may be more efficient than direct investments (due to,
The SEC recognizes that the proposed amendments may increase the ability of banking entities to engage in certain types of activities involving risk, and that increases in risk exposures of large groups of banking entities may negatively impact capital formation, securities markets, and the real economy, particularly during adverse economic conditions. Moreover, losses on investment portfolios may discourage capital market participation by various groups of investors. Three important considerations may mitigate these potential risks. First, as discussed throughout this economic analysis, banking entities already engage in a variety of permissible activities involving risk, including extensions of credit, underwriting, and market-making, and the activities of many types of private funds that would be excluded under the proposal largely replicate permissible and traditional activities of banking entities. Second, banking entities subject to the implementing regulations may also be subject to multiple prudential capital, margin, and liquidity requirements that facilitate the safety and soundness of banking entities and promote financial stability. Third, the proposed exclusions from the definition of covered fund each would include a number of conditions aimed at preventing evasion of section 13 of the BHC Act and the implementing regulations, promoting safety and soundness, and/or allowing for customer oriented financial services provided on arms-length, market terms.
Under the implementing regulations, a banking entity is not prohibited from acquiring or retaining an ownership interest in, or acting as sponsor to, a covered fund if the banking entity organizes or offers the covered fund and satisfies other requirements. One such requirement is that the banking entity provide specified disclosures to prospective and actual investors in the covered fund.
Importantly, the magnitude of the above effects on competition, capital formation, and allocative efficiency would be influenced by a large number of factors, such as prevailing macroeconomic conditions, the financial condition of firms seeking to raise capital, and of funds seeking to transact with banking entities, market saturation, and search for higher yields by investors during low interest rate environments. Moreover, the relative efficiency between fund structures and the direct provision of capital is likely to vary widely among banking entities and funds. The SEC recognizes that such economic effects may be dampened or magnified in different phases of the macroeconomic cycle and across various types of banking entities.
The SEC is unable to observe the amount of capital formation in different types of covered funds or underlying equity and debt securities that did not occur because of the 2013 rule. Because of the prolonged and overlapping implementation timeline of various post-crisis reforms, and because market participants restructured their trading and covered funds activities in anticipation of the 2013 rule being effective, the SEC cannot measure the counterfactual levels of capital formation and liquidity that would have
The SEC is requesting comment regarding all aspects of the economic analysis set forth here. To the extent possible, the SEC requests that market participants and other commenters provide supporting data and analysis with respect to the benefits, costs, and effects on competition, efficiency, and capital formation of adopting the proposed amendments or any reasonable alternatives. In addition, the SEC asks commenters to consider the following questions:
For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996, or “SBREFA,”
Banks, Banking, Compensation, Credit, Derivatives, Government securities, Insurance, Investments, National banks, Penalties, Reporting and recordkeeping requirements, Risk, Risk retention, Securities, Trusts and trustees.
Administrative practice and procedure, Banks, banking, Conflict of interests, Credit, Foreign banking, Government securities, Holding companies, Insurance, Insurance companies, Investments, Penalties, Reporting and recordkeeping requirements, Securities, State nonmember banks, State savings associations, Trusts and trustees.
Banks, banking, Capital, Compensation, Conflicts of interest, Credit, Derivatives, Government securities, Insurance, Insurance companies, Investments, Penalties, Reporting and recordkeeping requirements, Risk, Risk retention, Securities, Trusts and trustees.
Banks, Banking, Compensation, Credit, Derivatives, Federal branches and agencies, Federal savings associations, Government securities, Hedge funds, Insurance, Investments, National banks, Penalties, Proprietary trading, Reporting and recordkeeping requirements, Risk, Risk retention, Securities, Swap dealers, Trusts and trustees, Volcker rule.
Banks, Brokers, Dealers, Investment advisers, Recordkeeping, Reporting, Securities.
For the reasons stated in the Common Preamble, the Office of the Comptroller of the Currency proposes to amend chapter I of Title 12, Code of Federal Regulations as follows:
7 U.S.C. 27
(f)
(1) Is organized or established outside the United States, and the ownership interests of which are offered and sold solely outside the United States;
(2)(i) Would be a covered fund if the entity were organized or established in the United States, or
(ii) Is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in financial instruments for resale or other disposition or otherwise trading in financial instruments;
(3) Would not otherwise be a banking entity except by virtue of the acquisition or retention of an ownership interest in, sponsorship of, or relationship with the entity, by another banking entity that meets the following:
(i) The banking entity is not organized, or directly or indirectly controlled by a banking entity that is organized, under the laws of the United States or of any State; and
(ii) The banking entity's acquisition or retention of an ownership interest in or sponsorship of the fund meets the requirements for permitted covered fund activities and investments solely outside the United States, as provided in § 44.13(b);
(4) Is established and operated as part of a bona fide asset management business; and
(5) Is not operated in a manner that enables any other banking entity to evade the requirements of section 13 of the BHC Act or this part.
The revisions and additions read as follows:
(c) * * *
(1)
(A) Is organized or established outside of the United States; and
(B) Is authorized to offer and sell ownership interests, and such interests are offered and sold, through one or more public offerings.
(ii) With respect to a banking entity that is, or is controlled directly or indirectly by a banking entity that is, located in or organized under the laws of the United States or of any State and any issuer for which such banking entity acts as sponsor, the sponsoring banking entity may not rely on the exemption in paragraph (c)(1)(i) of this section for such issuer unless ownership interests in the issuer are sold predominantly to persons other than:
(A) Such sponsoring banking entity;
(B) Such issuer;
(C) Affiliates of such sponsoring banking entity or such issuer; and
(D) Directors and senior executive officers as defined in section 225.71(c) of the Board's Regulation Y (12 CFR 225.71(c)) of such entities.
(iii) For purposes of paragraph (c)(1)(i)(B) of this section, the term “public offering” means a distribution (as defined in § 44.4(a)(3)) of securities in any jurisdiction outside the United States to investors, including retail investors, provided that:
(A) The distribution is subject to substantive disclosure and retail investor protection laws or regulations;
(B) With respect to an issuer for which the banking entity serves as the investment manager, investment adviser, commodity trading advisor, commodity pool operator, or sponsor, the distribution complies with all applicable requirements in the jurisdiction in which such distribution is being made;
(C) The distribution does not restrict availability to investors having a minimum level of net worth or net investment assets; and
(D) The issuer has filed or submitted, with the appropriate regulatory authority in such jurisdiction, offering disclosure documents that are publicly available.
(3) * * *
(i) Is composed of no more than 10 unaffiliated co-venturers;
(8)
(A) Loans as defined in § 44.2(t);
(B) Rights or other assets designed to assure the servicing or timely distribution of proceeds to holders of such securities and rights or other assets that are related or incidental to purchasing or otherwise acquiring and holding the loans, provided that each asset that is a security (other than special units of beneficial interest and collateral certificates meeting the requirements of paragraph (c)(8)(v) of this section) meets the requirements of paragraph (c)(8)(iii) of this section;
(C) Interest rate or foreign exchange derivatives that meet the requirements of paragraph (c)(8)(iv) of this section; and
(D) Special units of beneficial interest and collateral certificates that meet the requirements of paragraph (c)(8)(v) of this section.
(E) Any other assets, provided that the aggregate value of any such other assets that do not meet the criteria specified in paragraphs (c)(8)(i)(A) through (c)(8)(i)(D) of this section do not exceed five percent of the aggregate value of the issuing entity's assets.
(ii)
(A) A security, including an asset-backed security, or an interest in an equity or debt security other than as permitted in paragraphs (c)(8)(iii), (iv), or (v) of this section;
(B) A derivative, other than a derivative that meets the requirements of paragraph (c)(8)(iv) of this section; or
(C) A commodity forward contract.
(iii)
(A) Cash equivalents—which, for the purposes of this paragraph, means high quality, highly liquid investments whose maturity corresponds to the securitization's expected or potential need for funds and whose currency corresponds to either the underlying loans or the asset-backed securities—for purposes of the rights and assets in paragraph (c)(8)(i)(B) of this section; or
(B) Securities received in lieu of debts previously contracted with respect to the loans supporting the asset-backed securities.
(iv)
(A) The written terms of the derivatives directly relate to the loans, the asset-backed securities, or the contractual rights or other assets described in paragraph (c)(8)(i)(B) of this section; and
(B) The derivatives reduce the interest rate and/or foreign exchange risks related to the loans, the asset-backed securities, or the contractual rights or other assets described in paragraph (c)(8)(i)(B) of this section.
(v)
(A) The special purpose vehicle that issues the special unit of beneficial interest or collateral certificate meets the requirements in this paragraph (c)(8);
(B) The special unit of beneficial interest or collateral certificate is used for the sole purpose of transferring to the issuing entity for the loan securitization the economic risks and benefits of the assets that are permissible for loan securitizations under this paragraph (c)(8) and does not directly or indirectly transfer any interest in any other economic or financial exposure;
(C) The special unit of beneficial interest or collateral certificate is created solely to satisfy legal requirements or otherwise facilitate the structuring of the loan securitization; and
(D) The special purpose vehicle that issues the special unit of beneficial interest or collateral certificate and the issuing entity are established under the direction of the same entity that initiated the loan securitization.
(10)
(11) * * *
(i) That is a small business investment company, as defined in section 103(3) of the Small Business Investment Act of 1958 (15 U.S.C. 662), or that has received from the Small Business Administration notice to proceed to qualify for a license as a small business investment company, which notice or license has not been revoked, or that has voluntarily surrendered its license to operate as a small business investment company in accordance with 13 CFR 107.1900 and does not make any new investments (other than investments in cash equivalents, which, for the purposes of this paragraph, means high quality, highly liquid investments whose maturity corresponds to the issuer's expected or potential need for funds and whose currency corresponds to the issuer's assets) after such voluntary surrender; or
(15)
(i)
(A) Loans as defined in § 44.2(t);
(B) Debt instruments, subject to paragraph (c)(15)(iv) of this section;
(C) Rights and other assets that are related or incidental to acquiring, holding, servicing, or selling such loans or debt instruments, provided that:
(
(
(
(
(
(D) Interest rate or foreign exchange derivatives, if:
(
(
(ii)
(A) Not engage in any activity that would constitute proprietary trading under § 44.3(b)(l)(i) of subpart A of this part, as if the issuer were a banking entity; and
(B) Not issue asset-backed securities.
(iii)
(A) Provides in writing to any prospective and actual investor in the issuer the disclosures required under § 44.11(a)(8), as if the issuer were a covered fund; and
(B) Ensures that the activities of the issuer are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly.
(iv)
(A) The banking entity does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the issuer or of any entity to which such issuer extends credit or in which such issuer invests; and
(B) Any assets the issuer holds pursuant to paragraphs (c)(15)(i)(B) or (c)(15)(i)(C)(
(v)
(A) Comply with the limitations imposed in §§ 44.14 (except the banking entity may acquire and retain any ownership interest in the issuer) and 44.15, as if the issuer were a covered fund; and
(B) Be conducted in compliance with, and subject to, applicable banking laws and regulations, including applicable safety and soundness standards.
(16)
(A) Is a venture capital fund as defined in 17 CFR 275.203(l)-1; and
(B) Does not engage in any activity that would constitute proprietary trading under § 44.3(b)(1)(i), as if the issuer were a banking entity.
(ii) A banking entity that acts as a sponsor, investment adviser, or commodity trading advisor to an issuer that meets the conditions in paragraph (c)(16)(i) of this section may not rely on this exclusion unless the banking entity:
(A) Provides in writing to any prospective and actual investor in the issuer the disclosures required under § 44.11 (a)(8), as if the issuer were a covered fund; and
(B) Ensures that the activities of the issuer are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly.
(iii) The banking entity must not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the issuer.
(iv) A banking entity's ownership interest in or relationship with the issuer must:
(A) Comply with the limitations imposed in §§ 44.14 (except the banking entity may acquire and retain any ownership interest in the issuer) and 44.15, as if the issuer were a covered fund; and
(B) Be conducted in compliance with, and subject to, applicable banking laws and regulations, including applicable safety and soundness standards.
(17)
(A) If the entity is a trust, the grantor(s) of the entity are all family customers; and
(B) If the entity is not a trust:
(
(
(ii) A banking entity may rely on the exclusion in paragraph (c)(17)(i) of this section with respect to an entity provided that the banking entity (or an affiliate):
(A) Provides bona fide trust, fiduciary, investment advisory, or commodity trading advisory services to the entity;
(B) Does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of such entity;
(C) Complies with the disclosure obligations under § 44.11(a)(8), as if such entity were a covered fund;
(D) Does not acquire or retain, as principal, an ownership interest in the entity, other than up to 0.5 percent of the entity's outstanding ownership interests that may be held by the banking entity and its affiliates for the purpose of and to the extent necessary for establishing corporate separateness or addressing bankruptcy, insolvency, or similar concerns;
(E) Complies with the requirements of §§ 44.14(b) and 44.15, as if such entity were a covered fund; and
(F) Complies with the requirements of 12 CFR 223.15(a), as if such banking entity and its affiliates were a member bank and the issuer were an affiliate thereof.
(iii) For purposes of paragraph (c)(17) of this section, the following definitions apply:
(A) “Closely related person” means a natural person (including the estate and estate planning vehicles of such person) who has longstanding business or personal relationships with any family customer.
(B) “Family customer” means:
(
(
(18)
(ii) A banking entity may rely on the exclusion in paragraph (c)(18)(i) of this section with respect to an issuer provided that:
(A) All of the ownership interests of the issuer are owned by the customer (which may include one or more of its affiliates) for whom the issuer was created, subject to paragraph (c)(18)(ii)(B)(
(B) The banking entity and its affiliates:
(
(
(
(
(
(
(d) * * *
(6)
(A) Has the right to participate in the selection or removal of a general partner, managing member, member of the board of directors or trustees, investment manager, investment adviser, or commodity trading advisor of the covered fund (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event, which includes the right to participate in the removal of an investment manager for cause or to nominate or vote on a nominated replacement manager upon an investment manager's resignation or removal);
(B) Has the right under the terms of the interest to receive a share of the income, gains or profits of the covered fund;
(C) Has the right to receive the underlying assets of the covered fund after all other interests have been redeemed and/or paid in full (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event);
(D) Has the right to receive all or a portion of excess spread (the positive difference, if any, between the aggregate interest payments received from the underlying assets of the covered fund and the aggregate interest paid to the holders of other outstanding interests);
(E) Provides under the terms of the interest that the amounts payable by the covered fund with respect to the interest could be reduced based on losses arising from the underlying assets of the covered fund, such as allocation of losses, write-downs or charge-offs of the outstanding principal balance, or reductions in the amount of interest due and payable on the interest;
(F) Receives income on a pass-through basis from the covered fund, or has a rate of return that is determined by reference to the performance of the underlying assets of the covered fund; or
(G) Any synthetic right to have, receive, or be allocated any of the rights in paragraphs (d)(6)(i)(A) through (F) of this section.
(ii) Ownership interest does not include:
(A) Restricted profit interest which is an interest held by an entity (or an employee or former employee thereof) in a covered fund for which the entity (or employee thereof) serves as investment manager, investment adviser, commodity trading advisor, or other service provider, so long as:
(
(
(
(
(B) Any senior loan or senior debt interest that has the following characteristics:
(
(
(
(
(
The revisions and addition read as follows:
(b) * * *
(1) * * *
(ii)
(A) Does not own, control, or hold with the power to vote 25 percent or more of the voting shares of the company or fund; and
(B) Provides investment advisory, commodity trading advisory, administrative, and other services to the company or fund in compliance with the limitations under applicable regulation, order, or other authority.
(4)
(ii)
(5)
(ii) A banking entity shall not be restricted under this section in the amount of any investment the banking entity makes alongside a covered fund as long as the investment is made in compliance with applicable laws and regulations, including applicable safety and soundness standards.
(c) * * *
(1)(i) For purposes of paragraph (a)(2)(iii) of this section, the aggregate value of all ownership interests held by a banking entity shall be the sum of all amounts paid or contributed by the banking entity in connection with acquiring or retaining an ownership interest in covered funds (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 44.10(d)(6)(ii)), on a historical cost basis;
(ii) Treatment of employee and director restricted profit interests financed by the banking entity. For purposes of paragraph (c)(1)(i) of this section, an investment by a director or employee of a banking entity who acquires a restricted profit interest in their personal capacity in a covered fund sponsored by the banking entity will be attributed to the banking entity if the banking entity, directly or indirectly, extends financing for the purpose of enabling the director or
(d)
(1)(i) The sum of all amounts paid or contributed by the banking entity in connection with acquiring or retaining an ownership interest (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 44.10(d)(6)(ii)), on a historical cost basis, plus any earnings received; and
(ii) The fair market value of the banking entity's ownership interests in the covered fund as determined under paragraph (b)(2)(ii) or (b)(3) of this section (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 44.10(d)(6)(ii)), if the banking entity accounts for the profits (or losses) of the fund investment in its financial statements.
(2) Treatment of employee and director restricted profit interests financed by the banking entity. For purposes of paragraph (d)(1) of this section, an investment by a director or employee of a banking entity who acquires a restricted profit interest in his or her personal capacity in a covered fund sponsored by the banking entity will be attributed to the banking entity if the banking entity, directly or indirectly, extends financing for the purpose of enabling the director or employee to acquire the restricted profit interest in the fund and the financing is used to acquire such ownership interest in the covered fund.
(e)
(2)
(i) Be submitted to the Board at least 90 days prior to the expiration of the applicable time period;
(ii) Provide the reasons for application, including information that addresses the factors in paragraph (e)(3) of this section; and
(iii) Explain the banking entity's plan for reducing the permitted investment in a covered fund through redemption, sale, dilution or other methods as required in paragraph (a)(2) of this section.
(3)
(i) Whether the investment would result, directly or indirectly, in a material exposure by the banking entity to high-risk assets or high-risk trading strategies;
(ii) The contractual terms governing the banking entity's interest in the covered fund;
(iii) The date on which the covered fund is expected to have attracted sufficient investments from investors unaffiliated with the banking entity to enable the banking entity to comply with the limitations in paragraph (a)(2)(i) of this section;
(iv) The total exposure of the covered banking entity to the investment and the risks that disposing of, or maintaining, the investment in the covered fund may pose to the banking entity and the financial stability of the United States;
(v) The cost to the banking entity of divesting or disposing of the investment within the applicable period;
(vi) Whether the investment or the divestiture or conformance of the investment would involve or result in a material conflict of interest between the banking entity and unaffiliated parties, including clients, customers, or counterparties to which it owes a duty;
(vii) The banking entity's prior efforts to reduce through redemption, sale, dilution, or other methods its ownership interests in the covered fund, including activities related to the marketing of interests in such covered fund;
(viii) Market conditions; and
(ix) Any other factor that the Board believes appropriate.
(4)
(5)
(d)
(2) For purposes of this paragraph (d), a qualifying foreign excluded fund means a banking entity that:
(i) Is organized or established outside the United States, and the ownership interests of which are offered and sold solely outside the United States;
(ii)(A) Would be a covered fund if the entity were organized or established in the United States, or
(B) Is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in financial instruments for resale or other disposition or otherwise trading in financial instruments;
(iii) Would not otherwise be a banking entity except by virtue of the acquisition or retention of an ownership interest in, sponsorship of, or relationship with the entity, by another banking entity that meets the following:
(A) The banking entity is not organized, or directly or indirectly controlled by a banking entity that is organized, under the laws of the United States or of any State; and
(B) The banking entity's acquisition of an ownership interest in or sponsorship of the fund by the foreign banking entity meets the requirements for permitted covered fund activities and investments solely outside the United States, as provided in § 44.13(b);
(iv) Is established and operated as part of a bona fide asset management business; and
(v) Is not operated in a manner that enables any other banking entity to evade the requirements of section 13 of the BHC Act or this part.
The revisions and additions read as follows:
(a) * * *
(2) * * *
(i) Acquire and retain any ownership interest in a covered fund in accordance with the requirements of §§ 44.11, 44.12, or 44.13;
(ii) * * *
(C) The Board has not determined that such transaction is inconsistent with the safe and sound operation and condition of the banking entity; and
(iii) Enter into a transaction with a covered fund that would be an exempt covered transaction under 12 U.S.C. 371c(d) or § 223.42 of the Board's Regulation W (12 CFR 223.42); and
(iv) Extend credit to or purchase assets from a covered fund, provided:
(A) Each extension of credit or purchase of assets is in the ordinary course of business in connection with payment transactions; settlement services; or futures, derivatives, and securities clearing;
(B) Each extension of credit is repaid, sold, or terminated by the end of five business days; and
(C) The banking entity making each extension of credit meets the requirements of § 223.42(l)(1)(i) and (ii) of the Board's Regulation W (12 CFR 223.42(l)(1)(i) and(ii)), as if the extension of credit was an intraday extension of credit, regardless of the duration of the extension of credit.
(3) Any transaction or activity permitted under paragraphs (a)(2)(iii) or (iv) must comply with the limitations in § 44.15.
(c)
For the reasons stated in the Common Preamble, the Board proposes to amend chapter I of Title 12, Code of Federal Regulations as follows:
12 U.S.C. 1851, 12 U.S.C. 221
(f)
(1) Is organized or established outside the United States, and the ownership interests of which are offered and sold solely outside the United States;
(2)(i) Would be a covered fund if the entity were organized or established in the United States, or
(ii) Is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in financial instruments for resale or other disposition or otherwise trading in financial instruments;
(3) Would not otherwise be a banking entity except by virtue of the acquisition or retention of an ownership interest in, sponsorship of, or relationship with the entity, by another banking entity that meets the following:
(i) The banking entity is not organized, or directly or indirectly controlled by a banking entity that is organized, under the laws of the United States or of any State; and
(ii) The banking entity's acquisition or retention of an ownership interest in or sponsorship of the fund meets the requirements for permitted covered fund activities and investments solely outside the United States, as provided in § 248.13(b);
(4) Is established and operated as part of a bona fide asset management business; and
(5) Is not operated in a manner that enables any other banking entity to evade the requirements of section 13 of the BHC Act or this part.
The revisions and additions read as follows:
(c) * * *
(1)
(A) Is organized or established outside of the United States; and
(B) Is authorized to offer and sell ownership interests, and such interests are offered and sold, through one or more public offerings.
(ii) With respect to a banking entity that is, or is controlled directly or indirectly by a banking entity that is, located in or organized under the laws of the United States or of any State and any issuer for which such banking entity acts as sponsor, the sponsoring banking entity may not rely on the exemption in paragraph (c)(1)(i) of this section for such issuer unless ownership interests in the issuer are sold predominantly to persons other than:
(A) Such sponsoring banking entity;
(B) Such issuer;
(C) Affiliates of such sponsoring banking entity or such issuer; and
(D) Directors and senior executive officers as defined in § 225.71(c) of the Board's Regulation Y (12 CFR 225.71(c)) of such entities.
(iii) For purposes of paragraph (c)(1)(i)(B) of this section, the term “public offering” means a distribution (as defined in § 248.4(a)(3)) of securities in any jurisdiction outside the United States to investors, including retail investors, provided that:
(A) The distribution is subject to substantive disclosure and retail investor protection laws or regulations;
(B) With respect to an issuer for which the banking entity serves as the investment manager, investment adviser, commodity trading advisor, commodity pool operator, or sponsor, the distribution complies with all applicable requirements in the jurisdiction in which such distribution is being made;
(C) The distribution does not restrict availability to investors having a minimum level of net worth or net investment assets; and
(D) The issuer has filed or submitted, with the appropriate regulatory authority in such jurisdiction, offering disclosure documents that are publicly available.
(3) * * *
(i) Is composed of no more than 10 unaffiliated co-venturers;
(8)
(A) Loans as defined in § 248.2(t);
(B) Rights or other assets designed to assure the servicing or timely distribution of proceeds to holders of such securities and rights or other assets that are related or incidental to purchasing or otherwise acquiring and holding the loans, provided that each asset that is a security (other than special units of beneficial interest and collateral certificates meeting the requirements of paragraph (c)(8)(v) of this section) meets the requirements of paragraph (c)(8)(iii) of this section;
(C) Interest rate or foreign exchange derivatives that meet the requirements of paragraph (c)(8)(iv) of this section; and
(D) Special units of beneficial interest and collateral certificates that meet the requirements of paragraph (c)(8)(v) of this section.
(E) Any other assets, provided that the aggregate value of any such other assets that do not meet the criteria specified in paragraphs (c)(8)(i)(A) through (c)(8)(i)(D) of this section do not exceed five percent of the aggregate value of the issuing entity's assets.
(ii)
(A) A security, including an asset-backed security, or an interest in an equity or debt security other than as permitted in paragraphs (c)(8)(iii), (iv), or (v) of this section;
(B) A derivative, other than a derivative that meets the requirements of paragraph (c)(8)(iv) of this section; or
(C) A commodity forward contract.
(iii)
(A) Cash equivalents—which, for the purposes of this paragraph, means high quality, highly liquid investments whose maturity corresponds to the securitization's expected or potential need for funds and whose currency corresponds to either the underlying loans or the asset-backed securities—for purposes of the rights and assets in paragraph (c)(8)(i)(B) of this section; or
(B) Securities received in lieu of debts previously contracted with respect to the loans supporting the asset-backed securities.
(iv)
(A) The written terms of the derivatives directly relate to the loans, the asset-backed securities, or the contractual rights or other assets described in paragraph (c)(8)(i)(B) of this section; and
(B) The derivatives reduce the interest rate and/or foreign exchange risks related to the loans, the asset-backed securities, or the contractual rights or other assets described in paragraph (c)(8)(i)(B) of this section.
(v)
(A) The special purpose vehicle that issues the special unit of beneficial interest or collateral certificate meets the requirements in this paragraph (c)(8);
(B) The special unit of beneficial interest or collateral certificate is used for the sole purpose of transferring to the issuing entity for the loan securitization the economic risks and benefits of the assets that are permissible for loan securitizations under this paragraph (c)(8) and does not directly or indirectly transfer any interest in any other economic or financial exposure;
(C) The special unit of beneficial interest or collateral certificate is created solely to satisfy legal requirements or otherwise facilitate the structuring of the loan securitization; and
(D) The special purpose vehicle that issues the special unit of beneficial interest or collateral certificate and the issuing entity are established under the direction of the same entity that initiated the loan securitization.
(10)
(11) * * *
(i) That is a small business investment company, as defined in section 103(3) of the Small Business Investment Act of 1958 (15 U.S.C. 662), or that has received from the Small Business Administration notice to proceed to qualify for a license as a small business investment company, which notice or license has not been revoked, or that has voluntarily surrendered its license to operate as a small business investment company in accordance with 13 CFR 107.1900 and does not make any new investments (other than investments in cash equivalents, which, for the purposes of this paragraph, means high quality, highly liquid investments whose maturity corresponds to the issuer's expected or potential need for funds and whose currency corresponds to the issuer's assets) after such voluntary surrender; or
(15)
(i)
(A) Loans as defined in § 248.2(t);
(B) Debt instruments, subject to paragraph (c)(15)(iv) of this section;
(C) Rights and other assets that are related or incidental to acquiring, holding, servicing, or selling such loans or debt instruments, provided that:
(
(
(
(
(
(D) Interest rate or foreign exchange derivatives, if:
(
(
(ii)
(A) Not engage in any activity that would constitute proprietary trading under § 248.3(b)(l)(i), as if the issuer were a banking entity; and
(B) Not issue asset-backed securities.
(iii)
(A) Provides in writing to any prospective and actual investor in the issuer the disclosures required under § 248.11(a)(8) of this subpart, as if the issuer were a covered fund; and
(B) Ensures that the activities of the issuer are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly.
(iv)
(A) The banking entity does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the issuer or of any entity to which such issuer extends credit or in which such issuer invests; and
(B) Any assets the issuer holds pursuant to paragraphs (c)(15)(i)(B) or (i)(C)(
(v)
(A) Comply with the limitations imposed in §§ 248.14 (except the banking entity may acquire and retain any ownership interest in the issuer) and 248.15, as if the issuer were a covered fund; and
(B) Be conducted in compliance with, and subject to, applicable banking laws and regulations, including applicable safety and soundness standards.
(16)
(A) Is a venture capital fund as defined in 17 CFR 275.203(l)-1; and
(B) Does not engage in any activity that would constitute proprietary trading under § 248.3(b)(1)(i), as if the issuer were a banking entity.
(ii) A banking entity that acts as a sponsor, investment adviser, or commodity trading advisor to an issuer that meets the conditions in paragraph (c)(16)(i) of this section may not rely on this exclusion unless the banking entity:
(A) Provides in writing to any prospective and actual investor in the issuer the disclosures required under § 248.11 (a)(8), as if the issuer were a covered fund; and
(B) Ensures that the activities of the issuer are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly.
(iii) The banking entity must not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the issuer.
(iv) A banking entity's ownership interest in or relationship with the issuer must:
(A) Comply with the limitations imposed in §§ 248.14 (except the banking entity may acquire and retain any ownership interest in the issuer) and 248.15, as if the issuer were a covered fund; and
(B) Be conducted in compliance with, and subject to, applicable banking laws and regulations, including applicable safety and soundness standards.
(17)
(A) If the entity is a trust, the grantor(s) of the entity are all family customers; and
(B) If the entity is not a trust:
(1) A majority of the voting interests in the entity are owned (directly or indirectly) by family customers; and
(2) The entity is owned only by family customers and up to 3 closely related persons of the family customers.
(ii) A banking entity may rely on the exclusion in paragraph (c)(17)(i) of this section with respect to an entity provided that the banking entity (or an affiliate):
(A) Provides bona fide trust, fiduciary, investment advisory, or commodity trading advisory services to the entity;
(B) Does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of such entity;
(C) Complies with the disclosure obligations under § 248.11(a)(8), as if such entity were a covered fund;
(D) Does not acquire or retain, as principal, an ownership interest in the entity, other than up to 0.5 percent of the entity's outstanding ownership interests that may be held by the banking entity and its affiliates for the purpose of and to the extent necessary for establishing corporate separateness or addressing bankruptcy, insolvency, or similar concerns;
(E) Complies with the requirements of §§ 248.14(b) and 248.15, as if such entity were a covered fund; and
(F) Complies with the requirements of 12 CFR 223.15(a), as if such banking entity and its affiliates were a member bank and the issuer were an affiliate thereof.
(iii) For purposes of paragraph (c)(17) of this section, the following definitions apply:
(A) “Closely related person” means a natural person (including the estate and estate planning vehicles of such person) who has longstanding business or personal relationships with any family customer.
(B) “Family customer” means:
(1) A family client, as defined in Rule 202(a)(11)(G)-1(d)(4) of the Investment Advisers Act of 1940 (17 CFR 275.202(a)(11)(G)-1(d)(4)); or
(2) Any natural person who is a father-in-law, mother-in-law, brother-in-law, sister-in-law, son-in-law or daughter-in-law of a family client, or a spouse or a spousal equivalent of any of the foregoing.
(18)
(ii) A banking entity may rely on the exclusion in paragraph (c)(18)(i) of this section with respect to an issuer provided that:
(A) All of the ownership interests of the issuer are owned by the customer (which may include one or more of its affiliates) for whom the issuer was created, subject to paragraph (c)(18)(ii)(B)(
(B) The banking entity and its affiliates:
(
(
(
(
(
(
(d) * * *
(6)
(A) Has the right to participate in the selection or removal of a general partner, managing member, member of the board of directors or trustees, investment manager, investment adviser, or commodity trading advisor of the covered fund (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event, which includes the right to participate in the removal of an investment manager for cause or to nominate or vote on a nominated replacement manager upon an investment manager's resignation or removal);
(B) Has the right under the terms of the interest to receive a share of the income, gains or profits of the covered fund;
(C) Has the right to receive the underlying assets of the covered fund after all other interests have been redeemed and/or paid in full (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event);
(D) Has the right to receive all or a portion of excess spread (the positive difference, if any, between the aggregate interest payments received from the underlying assets of the covered fund and the aggregate interest paid to the holders of other outstanding interests);
(E) Provides under the terms of the interest that the amounts payable by the covered fund with respect to the interest could be reduced based on losses arising from the underlying assets of the covered fund, such as allocation of losses, write-downs or charge-offs of the outstanding principal balance, or reductions in the amount of interest due and payable on the interest;
(F) Receives income on a pass-through basis from the covered fund, or has a rate of return that is determined by reference to the performance of the underlying assets of the covered fund; or
(G) Any synthetic right to have, receive, or be allocated any of the rights in paragraphs (d)(6)(i)(A) through (F) of this section.
(ii) Ownership interest does not include:
(A) Restricted profit interest which is an interest held by an entity (or an employee or former employee thereof) in a covered fund for which the entity (or employee thereof) serves as investment manager, investment adviser, commodity trading advisor, or other service provider, so long as:
(
(
(
(
(B) Any senior loan or senior debt interest that has the following characteristics:
(
(
(
(
(
The revisions and addition read as follows:
(b) * * *
(1) * * *
(ii)
(A) Does not own, control, or hold with the power to vote 25 percent or more of the voting shares of the company or fund; and
(B) Provides investment advisory, commodity trading advisory, administrative, and other services to the company or fund in compliance with the limitations under applicable regulation, order, or other authority.
(4)
(ii)
(5)
(ii) A banking entity shall not be restricted under this section in the amount of any investment the banking entity makes alongside a covered fund as long as the investment is made in compliance with applicable laws and regulations, including applicable safety and soundness standards.
(c) * * *
(1)(i) For purposes of paragraph (a)(2)(iii) of this section, the aggregate value of all ownership interests held by a banking entity shall be the sum of all amounts paid or contributed by the banking entity in connection with acquiring or retaining an ownership interest in covered funds (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 248.10(d)(6)(ii)), on a historical cost basis;
(ii) Treatment of employee and director restricted profit interests financed by the banking entity. For purposes of paragraph (c)(1)(i) of this section, an investment by a director or employee of a banking entity who acquires a restricted profit interest in their personal capacity in a covered fund sponsored by the banking entity will be attributed to the banking entity if the banking entity, directly or indirectly, extends financing for the purpose of enabling the director or employee to acquire the restricted profit interest in the fund and the financing is used to acquire such ownership interest in the covered fund.
(d)
(1)(i) The sum of all amounts paid or contributed by the banking entity in connection with acquiring or retaining an ownership interest (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 248.10(d)(6)(ii) of subpart C of this part), on a historical cost basis, plus any earnings received; and
(ii) The fair market value of the banking entity's ownership interests in the covered fund as determined under paragraph (b)(2)(ii) or (b)(3) of this section (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 248.10(d)(6)(ii) of subpart C of this part), if the banking entity accounts for the profits (or losses) of the fund investment in its financial statements.
(2) Treatment of employee and director restricted profit interests financed by the banking entity. For purposes of paragraph (d)(1) of this section, an investment by a director or employee of a banking entity who acquires a restricted profit interest in his or her personal capacity in a covered fund sponsored by the banking entity will be attributed to the banking entity if the banking entity, directly or indirectly, extends financing for the purpose of enabling the director or employee to acquire the restricted profit interest in the fund and the financing is used to acquire such ownership interest in the covered fund.
(e)
(2)
(i) Be submitted to the Board at least 90 days prior to the expiration of the applicable time period;
(ii) Provide the reasons for application, including information that addresses the factors in paragraph (e)(3) of this section; and
(iii) Explain the banking entity's plan for reducing the permitted investment in a covered fund through redemption, sale, dilution or other methods as required in paragraph (a)(2) of this section.
(3)
(i) Whether the investment would result, directly or indirectly, in a material exposure by the banking entity to high-risk assets or high-risk trading strategies;
(ii) The contractual terms governing the banking entity's interest in the covered fund;
(iii) The date on which the covered fund is expected to have attracted sufficient investments from investors unaffiliated with the banking entity to enable the banking entity to comply with the limitations in paragraph (a)(2)(i) of this section;
(iv) The total exposure of the covered banking entity to the investment and the risks that disposing of, or maintaining, the investment in the covered fund may pose to the banking entity and the financial stability of the United States;
(v) The cost to the banking entity of divesting or disposing of the investment within the applicable period;
(vi) Whether the investment or the divestiture or conformance of the investment would involve or result in a material conflict of interest between the banking entity and unaffiliated parties, including clients, customers, or counterparties to which it owes a duty;
(vii) The banking entity's prior efforts to reduce through redemption, sale,
(viii) Market conditions; and
(ix) Any other factor that the Board believes appropriate.
(4)
(5)
(d)
(2) For purposes of this paragraph (d), a qualifying foreign excluded fund means a banking entity that:
(i) Is organized or established outside the United States, and the ownership interests of which are offered and sold solely outside the United States;
(ii)(A) Would be a covered fund if the entity were organized or established in the United States, or
(B) Is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in financial instruments for resale or other disposition or otherwise trading in financial instruments;
(iii) Would not otherwise be a banking entity except by virtue of the acquisition or retention of an ownership interest in, sponsorship of, or relationship with the entity, by another banking entity that meets the following:
(A) The banking entity is not organized, or directly or indirectly controlled by a banking entity that is organized, under the laws of the United States or of any State; and
(B) The banking entity's acquisition of an ownership interest in or sponsorship of the fund by the foreign banking entity meets the requirements for permitted covered fund activities and investments solely outside the United States, as provided in § 248.13(b);
(iv) Is established and operated as part of a bona fide asset management business; and
(v) Is not operated in a manner that enables any other banking entity to evade the requirements of section 13 of the BHC Act or this part.
The revisions and additions read as follows:
(a) * * *
(2) * * *
(i) Acquire and retain any ownership interest in a covered fund in accordance with the requirements of §§ 248.11, 248.12, or 248.13;
(ii) * * *
(C) The Board has not determined that such transaction is inconsistent with the safe and sound operation and condition of the banking entity; and
(iii) Enter into a transaction with a covered fund that would be an exempt covered transaction under 12 U.S.C. 371c(d) or § 223.42 of the Board's Regulation W (12 CFR 223.42); and
(iv) Extend credit to or purchase assets from a covered fund, provided:
(A) Each extension of credit or purchase of assets is in the ordinary course of business in connection with payment transactions; settlement services; or futures, derivatives, and securities clearing;
(B) Each extension of credit is repaid, sold, or terminated by the end of five business days; and
(C) The banking entity making each extension of credit meets the requirements of § 223.42(l)(1)(i) and (ii) of the Board's Regulation W (12 CFR 223.42(l)(1)(i) and(ii)), as if the extension of credit was an intraday extension of credit, regardless of the duration of the extension of credit.
(3) Any transaction or activity permitted under paragraphs (a)(2)(iii) or (iv) must comply with the limitations in § 248.15.
(c)
For the reasons set forth in the Common Preamble, the Federal Deposit Insurance Corporation proposes to amend chapter III of Title 12, Code of Federal Regulations as follows:
12 U.S.C. 1851; 1811
(f)
(1) Is organized or established outside the United States, and the ownership interests of which are offered and sold solely outside the United States;
(2)(i) Would be a covered fund if the entity were organized or established in the United States, or
(ii) Is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in financial instruments for resale or other disposition or otherwise trading in financial instruments;
(3) Would not otherwise be a banking entity except by virtue of the acquisition or retention of an ownership interest in, sponsorship of, or relationship with the entity, by another banking entity that meets the following:
(i) The banking entity is not organized, or directly or indirectly controlled by a banking entity that is organized, under the laws of the United States or of any State; and
(ii) The banking entity's acquisition or retention of an ownership interest in or sponsorship of the fund meets the requirements for permitted covered fund activities and investments solely
(4) Is established and operated as part of a bona fide asset management business; and
(5) Is not operated in a manner that enables any other banking entity to evade the requirements of section 13 of the BHC Act or this part.
The revisions and additions read as follows:
(c) * * *
(1)
(A) Is organized or established outside of the United States; and
(B) Is authorized to offer and sell ownership interests, and such interests are offered and sold, through one or more public offerings.
(ii) With respect to a banking entity that is, or is controlled directly or indirectly by a banking entity that is, located in or organized under the laws of the United States or of any State and any issuer for which such banking entity acts as sponsor, the sponsoring banking entity may not rely on the exemption in paragraph (c)(1)(i) of this section for such issuer unless ownership interests in the issuer are sold predominantly to persons other than:
(A) Such sponsoring banking entity;
(B) Such issuer;
(C) Affiliates of such sponsoring banking entity or such issuer; and
(D) Directors and senior executive officers as defined in § 225.71(c) of the Board's Regulation Y (12 CFR 225.71(c)) of such entities.
(iii) For purposes of paragraph (c)(1)(i)(B) of this section, the term “public offering” means a distribution (as defined in § 351.4(a)(3)) of securities in any jurisdiction outside the United States to investors, including retail investors, provided that:
(A) The distribution is subject to substantive disclosure and retail investor protection laws or regulations;
(B) With respect to an issuer for which the banking entity serves as the investment manager, investment adviser, commodity trading advisor, commodity pool operator, or sponsor, the distribution complies with all applicable requirements in the jurisdiction in which such distribution is being made;
(C) The distribution does not restrict availability to investors having a minimum level of net worth or net investment assets; and
(D) The issuer has filed or submitted, with the appropriate regulatory authority in such jurisdiction, offering disclosure documents that are publicly available.
(3) * * *
(i) Is composed of no more than 10 unaffiliated co-venturers;
(8)
(A) Loans as defined in § 351.2(t);
(B) Rights or other assets designed to assure the servicing or timely distribution of proceeds to holders of such securities and rights or other assets that are related or incidental to purchasing or otherwise acquiring and holding the loans, provided that each asset that is a security (other than special units of beneficial interest and collateral certificates meeting the requirements of paragraph (c)(8)(v) of this section) meets the requirements of paragraph (c)(8)(iii) of this section;
(C) Interest rate or foreign exchange derivatives that meet the requirements of paragraph (c)(8)(iv) of this section; and
(D) Special units of beneficial interest and collateral certificates that meet the requirements of paragraph (c)(8)(v) of this section.
(E) Any other assets, provided that the aggregate value of any such other assets that do not meet the criteria specified in paragraphs (c)(8)(i)(A) through (c)(8)(i)(D) of this section do not exceed five percent of the aggregate value of the issuing entity's assets.
(ii)
(A) A security, including an asset-backed security, or an interest in an equity or debt security other than as permitted in paragraphs (c)(8)(iii), (iv), or (v) of this section;
(B) A derivative, other than a derivative that meets the requirements of paragraph (c)(8)(iv) of this section; or
(C) A commodity forward contract.
(iii)
(A) Cash equivalents—which, for the purposes of this paragraph, means high quality, highly liquid investments whose maturity corresponds to the securitization's expected or potential need for funds and whose currency corresponds to either the underlying loans or the asset-backed securities—for purposes of the rights and assets in paragraph (c)(8)(i)(B) of this section; or
(B) Securities received in lieu of debts previously contracted with respect to the loans supporting the asset-backed securities.
(iv)
(A) The written terms of the derivatives directly relate to the loans, the asset-backed securities, or the contractual rights or other assets described in paragraph (c)(8)(i)(B) of this section; and
(B) The derivatives reduce the interest rate and/or foreign exchange risks related to the loans, the asset-backed securities, or the contractual rights or other assets described in paragraph (c)(8)(i)(B) of this section.
(v)
(A) The special purpose vehicle that issues the special unit of beneficial interest or collateral certificate meets the requirements in this paragraph (c)(8);
(B) The special unit of beneficial interest or collateral certificate is used for the sole purpose of transferring to the issuing entity for the loan securitization the economic risks and benefits of the assets that are permissible for loan securitizations under this paragraph (c)(8) and does not directly or indirectly transfer any interest in any other economic or financial exposure;
(C) The special unit of beneficial interest or collateral certificate is created solely to satisfy legal requirements or otherwise facilitate the structuring of the loan securitization; and
(D) The special purpose vehicle that issues the special unit of beneficial interest or collateral certificate and the issuing entity are established under the direction of the same entity that initiated the loan securitization.
(10)
(11) * * *
(i) That is a small business investment company, as defined in section 103(3) of the Small Business Investment Act of 1958 (15 U.S.C. 662), or that has received from the Small Business Administration notice to proceed to qualify for a license as a small business investment company, which notice or license has not been revoked, or that has voluntarily surrendered its license to operate as a small business investment company in accordance with 13 CFR 107.1900 and does not make any new investments (other than investments in cash equivalents, which, for the purposes of this paragraph, means high quality, highly liquid investments whose maturity corresponds to the issuer's expected or potential need for funds and whose currency corresponds to the issuer's assets) after such voluntary surrender; or
(15)
(i)
(A) Loans as defined in § 351.2(t);
(B) Debt instruments, subject to paragraph (c)(15)(iv) of this section;
(C) Rights and other assets that are related or incidental to acquiring, holding, servicing, or selling such loans or debt instruments, provided that:
(
(
(
(
(
(D) Interest rate or foreign exchange derivatives, if:
(
(
(ii)
(A) Not engage in any activity that would constitute proprietary trading under § 351.3(b)(l)(i) of subpart A of this part, as if the issuer were a banking entity; and
(B) Not issue asset-backed securities.
(iii)
(A) Provides in writing to any prospective and actual investor in the issuer the disclosures required under § 351.11(a)(8), as if the issuer were a covered fund; and
(B) Ensures that the activities of the issuer are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly.
(iv)
(A) The banking entity does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the issuer or of any entity to which such issuer extends credit or in which such issuer invests; and
(B) Any assets the issuer holds pursuant to paragraphs (c)(15)(i)(B) or (i)(C)(
(v)
(A) Comply with the limitations imposed in §§ 351.14 (except the banking entity may acquire and retain any ownership interest in the issuer) and 351.15, as if the issuer were a covered fund; and
(B) Be conducted in compliance with, and subject to, applicable banking laws and regulations, including applicable safety and soundness standards.
(16)
(A) Is a venture capital fund as defined in 17 CFR 275.203(l)-1; and
(B) Does not engage in any activity that would constitute proprietary trading under § 351.3(b)(1)(i), as if the issuer were a banking entity.
(ii) A banking entity that acts as a sponsor, investment adviser, or commodity trading advisor to an issuer that meets the conditions in paragraph (c)(16)(i) of this section may not rely on this exclusion unless the banking entity:
(A) Provides in writing to any prospective and actual investor in the issuer the disclosures required under § 351.11(a)(8), as if the issuer were a covered fund; and
(B) Ensures that the activities of the issuer are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly.
(iii) The banking entity must not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the issuer.
(iv) A banking entity's ownership interest in or relationship with the issuer must:
(A) Comply with the limitations imposed in §§ 351.14 (except the banking entity may acquire and retain any ownership interest in the issuer) and 351.15, as if the issuer were a covered fund; and
(B) Be conducted in compliance with, and subject to, applicable banking laws and regulations, including applicable safety and soundness standards.
(17)
(A) If the entity is a trust, the grantor(s) of the entity are all family customers; and
(B) If the entity is not a trust:
(
(
(ii) A banking entity may rely on the exclusion in paragraph (c)(17)(i) of this section with respect to an entity provided that the banking entity (or an affiliate):
(A) Provides bona fide trust, fiduciary, investment advisory, or commodity trading advisory services to the entity;
(B) Does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of such entity;
(C) Complies with the disclosure obligations under § 351.11(a)(8), as if such entity were a covered fund;
(D) Does not acquire or retain, as principal, an ownership interest in the entity, other than up to 0.5 percent of the entity's outstanding ownership interests that may be held by the banking entity and its affiliates for the purpose of and to the extent necessary for establishing corporate separateness or addressing bankruptcy, insolvency, or similar concerns;
(E) Complies with the requirements of §§ 351.14(b) and 351.15, as if such entity were a covered fund; and
(F) Complies with the requirements of 12 CFR 223.15(a), as if such banking entity and its affiliates were a member bank and the issuer were an affiliate thereof.
(iii) For purposes of paragraph (c)(17) of this section, the following definitions apply:
(A) “Closely related person” means a natural person (including the estate and estate planning vehicles of such person) who has longstanding business or personal relationships with any family customer.
(B) “Family customer” means:
(
(
(18)
(ii) A banking entity may rely on the exclusion in paragraph (c)(18)(i) of this section with respect to an issuer provided that:
(A) All of the ownership interests of the issuer are owned by the customer (which may include one or more of its affiliates) for whom the issuer was created, subject to paragraph (c)(18)(ii)(B)(
(B) The banking entity and its affiliates:
(
(
(
(
(
(
(d) * * *
(6)
(A) Has the right to participate in the selection or removal of a general partner, managing member, member of the board of directors or trustees, investment manager, investment adviser, or commodity trading advisor of the covered fund (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event, which includes the right to participate in the removal of an investment manager for cause or to nominate or vote on a nominated replacement manager upon an investment manager's resignation or removal);
(B) Has the right under the terms of the interest to receive a share of the income, gains or profits of the covered fund;
(C) Has the right to receive the underlying assets of the covered fund after all other interests have been redeemed and/or paid in full (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event);
(D) Has the right to receive all or a portion of excess spread (the positive difference, if any, between the aggregate interest payments received from the underlying assets of the covered fund and the aggregate interest paid to the holders of other outstanding interests);
(E) Provides under the terms of the interest that the amounts payable by the covered fund with respect to the interest could be reduced based on losses arising from the underlying assets of the covered fund, such as allocation of losses, write-downs or charge-offs of the outstanding principal balance, or reductions in the amount of interest due and payable on the interest;
(F) Receives income on a pass-through basis from the covered fund, or has a rate of return that is determined by reference to the performance of the underlying assets of the covered fund; or
(G) Any synthetic right to have, receive, or be allocated any of the rights in paragraphs (d)(6)(i)(A) through (F) of this section.
(ii) Ownership interest does not include:
(A) Restricted profit interest which is an interest held by an entity (or an employee or former employee thereof) in a covered fund for which the entity (or employee thereof) serves as investment manager, investment adviser, commodity trading advisor, or other service provider, so long as:
(
(
(
(
(B) Any senior loan or senior debt interest that has the following characteristics:
(
(
(
(
(
The revisions and addition read as follows:
(b) * * *
(1) * * *
(ii)
(A) Does not own, control, or hold with the power to vote 25 percent or more of the voting shares of the company or fund; and
(B) Provides investment advisory, commodity trading advisory, administrative, and other services to the company or fund in compliance with the limitations under applicable regulation, order, or other authority.
(4)
(ii)
(5)
(ii) A banking entity shall not be restricted under this section in the amount of any investment the banking entity makes alongside a covered fund as long as the investment is made in compliance with applicable laws and regulations, including applicable safety and soundness standards.
(c) * * *
(1)(i) For purposes of paragraph (a)(2)(iii) of this section, the aggregate value of all ownership interests held by a banking entity shall be the sum of all amounts paid or contributed by the banking entity in connection with acquiring or retaining an ownership interest in covered funds (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 351.10(d)(6)(ii)), on a historical cost basis;
(ii) Treatment of employee and director restricted profit interests financed by the banking entity. For purposes of paragraph (c)(1)(i) of this section, an investment by a director or employee of a banking entity who acquires a restricted profit interest in their personal capacity in a covered fund sponsored by the banking entity will be attributed to the banking entity if the banking entity, directly or indirectly, extends financing for the purpose of enabling the director or employee to acquire the restricted profit interest in the fund and the financing is used to acquire such ownership interest in the covered fund.
(d)
(1)(i) The sum of all amounts paid or contributed by the banking entity in connection with acquiring or retaining an ownership interest (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 351.10(d)(6)(ii)), on a historical cost basis, plus any earnings received; and
(ii) The fair market value of the banking entity's ownership interests in
(2) Treatment of employee and director restricted profit interests financed by the banking entity. For purposes of paragraph (d)(1) of this section, an investment by a director or employee of a banking entity who acquires a restricted profit interest in his or her personal capacity in a covered fund sponsored by the banking entity will be attributed to the banking entity if the banking entity, directly or indirectly, extends financing for the purpose of enabling the director or employee to acquire the restricted profit interest in the fund and the financing is used to acquire such ownership interest in the covered fund.
(e)
(2)
(i) Be submitted to the Board at least 90 days prior to the expiration of the applicable time period;
(ii) Provide the reasons for application, including information that addresses the factors in paragraph (e)(3) of this section; and
(iii) Explain the banking entity's plan for reducing the permitted investment in a covered fund through redemption, sale, dilution or other methods as required in paragraph (a)(2) of this section.
(3)
(i) Whether the investment would result, directly or indirectly, in a material exposure by the banking entity to high-risk assets or high-risk trading strategies;
(ii) The contractual terms governing the banking entity's interest in the covered fund;
(iii) The date on which the covered fund is expected to have attracted sufficient investments from investors unaffiliated with the banking entity to enable the banking entity to comply with the limitations in paragraph (a)(2)(i) of this section;
(iv) The total exposure of the covered banking entity to the investment and the risks that disposing of, or maintaining, the investment in the covered fund may pose to the banking entity and the financial stability of the United States;
(v) The cost to the banking entity of divesting or disposing of the investment within the applicable period;
(vi) Whether the investment or the divestiture or conformance of the investment would involve or result in a material conflict of interest between the banking entity and unaffiliated parties, including clients, customers, or counterparties to which it owes a duty;
(vii) The banking entity's prior efforts to reduce through redemption, sale, dilution, or other methods its ownership interests in the covered fund, including activities related to the marketing of interests in such covered fund;
(viii) Market conditions; and
(ix) Any other factor that the Board believes appropriate.
(4)
(5)
(d)
(2) For purposes of this paragraph (d), a qualifying foreign excluded fund means a banking entity that:
(i) Is organized or established outside the United States, and the ownership interests of which are offered and sold solely outside the United States;
(ii)(A) Would be a covered fund if the entity were organized or established in the United States, or
(B) Is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in financial instruments for resale or other disposition or otherwise trading in financial instruments;
(iii) Would not otherwise be a banking entity except by virtue of the acquisition or retention of an ownership interest in, sponsorship of, or relationship with the entity, by another banking entity that meets the following:
(A) The banking entity is not organized, or directly or indirectly controlled by a banking entity that is organized, under the laws of the United States or of any State; and
(B) The banking entity's acquisition of an ownership interest in or sponsorship of the fund by the foreign banking entity meets the requirements for permitted covered fund activities and investments solely outside the United States, as provided in § 351.13(b);
(iv) Is established and operated as part of a bona fide asset management business; and
(v) Is not operated in a manner that enables any other banking entity to evade the requirements of section 13 of the BHC Act or this part.
The revisions and additions read as follows:
(a) * * *
(2) * * *
(i) Acquire and retain any ownership interest in a covered fund in accordance with the requirements of §§ 351.11, 351.12, or 351.13;
(ii) * * *
(C) The Board has not determined that such transaction is inconsistent with the safe and sound operation and condition of the banking entity; and
(iii) Enter into a transaction with a covered fund that would be an exempt covered transaction under 12 U.S.C. 371c(d) or § 223.42 of the Board's Regulation W (12 CFR 223.42); and
(iv) Extend credit to or purchase assets from a covered fund, provided:
(A) Each extension of credit or purchase of assets is in the ordinary course of business in connection with payment transactions; settlement services; or futures, derivatives, and securities clearing;
(B) Each extension of credit is repaid, sold, or terminated by the end of five business days; and
(C) The banking entity making each extension of credit meets the requirements of section 223.42(l)(1)(i) and (ii) of the Board's Regulation W (12 CFR 223.42(l)(1)(i) and (ii)), as if the extension of credit was an intraday extension of credit, regardless of the duration of the extension of credit.
(3) Any transaction or activity permitted under paragraphs (a)(2)(iii) or (iv) must comply with the limitations in § 351.15 of this section.
(c)
For the reasons set forth in the Common Preamble, the Commodity Futures Trading Commission proposes to amend part 75 to chapter I of Title 17 of the Code of Federal Regulations as follows:
12 U.S.C. 1851.
(f)
(1) Is organized or established outside the United States, and the ownership interests of which are offered and sold solely outside the United States;
(2)(i) Would be a covered fund if the entity were organized or established in the United States, or
(ii) Is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in financial instruments for resale or other disposition or otherwise trading in financial instruments;
(3) Would not otherwise be a banking entity except by virtue of the acquisition or retention of an ownership interest in, sponsorship of, or relationship with the entity, by another banking entity that meets the following:
(i) The banking entity is not organized, or directly or indirectly controlled by a banking entity that is organized, under the laws of the United States or of any State; and
(ii) The banking entity's acquisition or retention of an ownership interest in or sponsorship of the fund meets the requirements for permitted covered fund activities and investments solely outside the United States, as provided in § 75.13(b);
(4) Is established and operated as part of a bona fide asset management business; and
(5) Is not operated in a manner that enables any other banking entity to evade the requirements of section 13 of the BHC Act or this part.
The revisions and additions read as follows:
(c) * * *
(1)
(A) Is organized or established outside of the United States; and
(B) Is authorized to offer and sell ownership interests, and such interests are offered and sold, through one or more public offerings.
(ii) With respect to a banking entity that is, or is controlled directly or indirectly by a banking entity that is, located in or organized under the laws of the United States or of any State and any issuer for which such banking entity acts as sponsor, the sponsoring banking entity may not rely on the exemption in paragraph (c)(1)(i) of this section for such issuer unless ownership interests in the issuer are sold predominantly to persons other than:
(A) Such sponsoring banking entity;
(B) Such issuer;
(C) Affiliates of such sponsoring banking entity or such issuer; and
(D) Directors and senior executive officers as defined in § 225.71(c) of the Board's Regulation Y (12 CFR 225.71(c)) of such entities.
(iii) For purposes of paragraph (c)(1)(i)(B) of this section, the term “public offering” means a distribution (as defined in § 75.4(a)(3)) of securities in any jurisdiction outside the United States to investors, including retail investors, provided that:
(A) The distribution is subject to substantive disclosure and retail investor protection laws or regulations;
(B) With respect to an issuer for which the banking entity serves as the investment manager, investment adviser, commodity trading advisor, commodity pool operator, or sponsor, the distribution complies with all applicable requirements in the jurisdiction in which such distribution is being made;
(C) The distribution does not restrict availability to investors having a minimum level of net worth or net investment assets; and
(D) The issuer has filed or submitted, with the appropriate regulatory authority in such jurisdiction, offering disclosure documents that are publicly available.
(3) * * *
(i) Is composed of no more than 10 unaffiliated co-venturers;
(8)
(A) Loans as defined in § 75.2(t);
(B) Rights or other assets designed to assure the servicing or timely distribution of proceeds to holders of such securities and rights or other assets that are related or incidental to purchasing or otherwise acquiring and holding the loans, provided that each asset that is a security (other than special units of beneficial interest and collateral certificates meeting the requirements of paragraph (c)(8)(v) of this section) meets the requirements of paragraph (c)(8)(iii) of this section;
(C) Interest rate or foreign exchange derivatives that meet the requirements of paragraph (c)(8)(iv) of this section; and
(D) Special units of beneficial interest and collateral certificates that meet the requirements of paragraph (c)(8)(v) of this section.
(E) Any other assets, provided that the aggregate value of any such other assets that do not meet the criteria specified in paragraphs (c)(8)(i)(A) through (c)(8)(i)(D) of this section do not exceed five percent of the aggregate value of the issuing entity's assets.
(ii)
(A) A security, including an asset-backed security, or an interest in an equity or debt security other than as permitted in paragraphs (c)(8)(iii), (iv), or (v) of this section;
(B) A derivative, other than a derivative that meets the requirements of paragraph (c)(8)(iv) of this section; or
(C) A commodity forward contract.
(iii)
(A) Cash equivalents—which, for the purposes of this paragraph, means high quality, highly liquid investments whose maturity corresponds to the securitization's expected or potential need for funds and whose currency corresponds to either the underlying loans or the asset-backed securities—for purposes of the rights and assets in paragraph (c)(8)(i)(B) of this section; or
(B) Securities received in lieu of debts previously contracted with respect to the loans supporting the asset-backed securities.
(iv)
(A) The written terms of the derivatives directly relate to the loans, the asset-backed securities, or the contractual rights or other assets described in paragraph (c)(8)(i)(B) of this section; and
(B) The derivatives reduce the interest rate and/or foreign exchange risks related to the loans, the asset-backed securities, or the contractual rights or other assets described in paragraph (c)(8)(i)(B) of this section.
(v)
(A) The special purpose vehicle that issues the special unit of beneficial interest or collateral certificate meets the requirements in this paragraph (c)(8);
(B) The special unit of beneficial interest or collateral certificate is used for the sole purpose of transferring to the issuing entity for the loan securitization the economic risks and benefits of the assets that are permissible for loan securitizations under this paragraph (c)(8) and does not directly or indirectly transfer any interest in any other economic or financial exposure;
(C) The special unit of beneficial interest or collateral certificate is created solely to satisfy legal requirements or otherwise facilitate the structuring of the loan securitization; and
(D) The special purpose vehicle that issues the special unit of beneficial interest or collateral certificate and the issuing entity are established under the direction of the same entity that initiated the loan securitization.
(10)
(11) * * *
(i) That is a small business investment company, as defined in section 103(3) of the Small Business Investment Act of 1958 (15 U.S.C. 662), or that has received from the Small Business Administration notice to proceed to qualify for a license as a small business investment company, which notice or license has not been revoked, or that has voluntarily surrendered its license to operate as a small business investment company in accordance with 13 CFR 107.1900 and does not make any new investments (other than investments in cash equivalents, which, for the purposes of this paragraph, means high quality, highly liquid investments whose maturity corresponds to the issuer's expected or potential need for funds and whose currency corresponds to the issuer's assets) after such voluntary surrender; or
(15)
(i)
(A) Loans as defined in § 75.2(t);
(B) Debt instruments, subject to paragraph (c)(15)(iv) of this section;
(C) Rights and other assets that are related or incidental to acquiring, holding, servicing, or selling such loans or debt instruments, provided that:
(
(
(
(
(
(D) Interest rate or foreign exchange derivatives, if:
(
(
(ii)
(A) Not engage in any activity that would constitute proprietary trading under § 75.3(b)(l)(i), as if the issuer were a banking entity; and
(B) Not issue asset-backed securities.
(iii)
(A) Provides in writing to any prospective and actual investor in the issuer the disclosures required under § 75.11(a)(8), as if the issuer were a covered fund; and
(B) Ensures that the activities of the issuer are consistent with safety and soundness standards that are
(iv)
(A) The banking entity does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the issuer or of any entity to which such issuer extends credit or in which such issuer invests; and
(B) Any assets the issuer holds pursuant to paragraphs (c)(15)(i)(B) or (i)(C)(
(v)
(A) Comply with the limitations imposed in §§ 75.14 (except the banking entity may acquire and retain any ownership interest in the issuer) and 75.15, as if the issuer were a covered fund; and
(B) Be conducted in compliance with, and subject to, applicable banking laws and regulations, including applicable safety and soundness standards.
(16)
(A) Is a venture capital fund as defined in 17 CFR 275.203(l)-1; and
(B) Does not engage in any activity that would constitute proprietary trading under § 75.3(b)(1)(i), as if the issuer were a banking entity.
(ii) A banking entity that acts as a sponsor, investment adviser, or commodity trading advisor to an issuer that meets the conditions in paragraph (c)(16)(i) of this section may not rely on this exclusion unless the banking entity:
(A) Provides in writing to any prospective and actual investor in the issuer the disclosures required under § 75.11 (a)(8), as if the issuer were a covered fund; and
(B) Ensures that the activities of the issuer are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly.
(iii) The banking entity must not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the issuer.
(iv) A banking entity's ownership interest in or relationship with the issuer must:
(A) Comply with the limitations imposed in §§ 75.14 (except the banking entity may acquire and retain any ownership interest in the issuer) and 75.15, as if the issuer were a covered fund; and
(B) Be conducted in compliance with, and subject to, applicable banking laws and regulations, including applicable safety and soundness standards.
(17)
(A) If the entity is a trust, the grantor(s) of the entity are all family customers; and
(B) If the entity is not a trust:
(
(
(ii) A banking entity may rely on the exclusion in paragraph (c)(17)(i) of this section with respect to an entity provided that the banking entity (or an affiliate):
(A) Provides bona fide trust, fiduciary, investment advisory, or commodity trading advisory services to the entity;
(B) Does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of such entity;
(C) Complies with the disclosure obligations under § 75.11(a)(8), as if such entity were a covered fund;
(D) Does not acquire or retain, as principal, an ownership interest in the entity, other than up to 0.5 percent of the entity's outstanding ownership interests that may be held by the banking entity and its affiliates for the purpose of and to the extent necessary for establishing corporate separateness or addressing bankruptcy, insolvency, or similar concerns;
(E) Complies with the requirements of §§ 75.14(b) and 75.15, as if such entity were a covered fund; and
(F) Complies with the requirements of 12 CFR 223.15(a), as if such banking entity and its affiliates were a member bank and the issuer were an affiliate thereof.
(iii) For purposes of paragraph (c)(17) of this section, the following definitions apply:
(A) “Closely related person” means a natural person (including the estate and estate planning vehicles of such person) who has longstanding business or personal relationships with any family customer.
(B) “Family customer” means:
(
(
(18)
(ii) A banking entity may rely on the exclusion in paragraph (c)(18)(i) of this section with respect to an issuer provided that:
(A) All of the ownership interests of the issuer are owned by the customer (which may include one or more of its affiliates) for whom the issuer was created, subject to paragraph (c)(18)(ii)(B)(
(B) The banking entity and its affiliates:
(
(
(
(
(
(
(d) * * *
(6)
(A) Has the right to participate in the selection or removal of a general partner, managing member, member of the board of directors or trustees, investment manager, investment adviser, or commodity trading advisor of the covered fund (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event, which includes the right to participate in the removal of an investment manager for cause or to nominate or vote on a nominated replacement manager upon an investment manager's resignation or removal);
(B) Has the right under the terms of the interest to receive a share of the income, gains or profits of the covered fund;
(C) Has the right to receive the underlying assets of the covered fund after all other interests have been redeemed and/or paid in full (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event);
(D) Has the right to receive all or a portion of excess spread (the positive difference, if any, between the aggregate interest payments received from the underlying assets of the covered fund and the aggregate interest paid to the holders of other outstanding interests);
(E) Provides under the terms of the interest that the amounts payable by the covered fund with respect to the interest could be reduced based on losses arising from the underlying assets of the covered fund, such as allocation of losses, write-downs or charge-offs of the outstanding principal balance, or reductions in the amount of interest due and payable on the interest;
(F) Receives income on a pass-through basis from the covered fund, or has a rate of return that is determined by reference to the performance of the underlying assets of the covered fund; or
(G) Any synthetic right to have, receive, or be allocated any of the rights in paragraphs (d)(6)(i)(A) through (F) of this section.
(ii) Ownership interest does not include:
(A) Restricted profit interest which is an interest held by an entity (or an employee or former employee thereof) in a covered fund for which the entity (or employee thereof) serves as investment manager, investment adviser, commodity trading advisor, or other service provider, so long as:
(
(
(
(
(B) Any senior loan or senior debt interest that has the following characteristics:
(
(
(
(
(
The revisions and addition read as follows:
(b) * * *
(1) * * *
(ii)
(A) Does not own, control, or hold with the power to vote 25 percent or more of the voting shares of the company or fund; and
(B) Provides investment advisory, commodity trading advisory, administrative, and other services to the company or fund in compliance with the limitations under applicable regulation, order, or other authority.
(4)
(ii)
(5)
(ii) A banking entity shall not be restricted under this section in the amount of any investment the banking entity makes alongside a covered fund as long as the investment is made in compliance with applicable laws and regulations, including applicable safety and soundness standards.
(c) * * *
(1)(i) For purposes of paragraph (a)(2)(iii) of this section, the aggregate value of all ownership interests held by a banking entity shall be the sum of all amounts paid or contributed by the banking entity in connection with acquiring or retaining an ownership interest in covered funds (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 75.10(d)(6)(ii) of this subpart), on a historical cost basis;
(ii) Treatment of employee and director restricted profit interests financed by the banking entity. For purposes of paragraph (c)(1)(i) of this section, an investment by a director or employee of a banking entity who acquires a restricted profit interest in their personal capacity in a covered fund sponsored by the banking entity will be attributed to the banking entity if the banking entity, directly or indirectly, extends financing for the purpose of enabling the director or employee to acquire the restricted profit interest in the fund and the financing is used to acquire such ownership interest in the covered fund.
(d)
(1)(i) The sum of all amounts paid or contributed by the banking entity in connection with acquiring or retaining an ownership interest (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 75.10(d)(6)(ii)), on a historical cost basis, plus any earnings received; and
(ii) The fair market value of the banking entity's ownership interests in the covered fund as determined under paragraph (b)(2)(ii) or (b)(3) of this section (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 75.10(d)(6)(ii)), if the banking entity accounts for the profits (or losses) of the fund investment in its financial statements.
(2) Treatment of employee and director restricted profit interests financed by the banking entity. For purposes of paragraph (d)(1) of this section, an investment by a director or employee of a banking entity who acquires a restricted profit interest in his or her personal capacity in a covered fund sponsored by the banking entity will be attributed to the banking entity if the banking entity, directly or indirectly, extends financing for the purpose of enabling the director or employee to acquire the restricted profit interest in the fund and the financing is used to acquire such ownership interest in the covered fund.
(e)
(2)
(i) Be submitted to the Board at least 90 days prior to the expiration of the applicable time period;
(ii) Provide the reasons for application, including information that addresses the factors in paragraph (e)(3) of this section; and
(iii) Explain the banking entity's plan for reducing the permitted investment in a covered fund through redemption, sale, dilution or other methods as required in paragraph (a)(2) of this section.
(3)
(i) Whether the investment would result, directly or indirectly, in a material exposure by the banking entity to high-risk assets or high-risk trading strategies;
(ii) The contractual terms governing the banking entity's interest in the covered fund;
(iii) The date on which the covered fund is expected to have attracted sufficient investments from investors unaffiliated with the banking entity to enable the banking entity to comply with the limitations in paragraph (a)(2)(i) of this section;
(iv) The total exposure of the covered banking entity to the investment and the risks that disposing of, or maintaining, the investment in the covered fund may pose to the banking entity and the financial stability of the United States;
(v) The cost to the banking entity of divesting or disposing of the investment within the applicable period;
(vi) Whether the investment or the divestiture or conformance of the investment would involve or result in a material conflict of interest between the banking entity and unaffiliated parties, including clients, customers, or counterparties to which it owes a duty;
(vii) The banking entity's prior efforts to reduce through redemption, sale, dilution, or other methods its ownership interests in the covered fund, including activities related to the marketing of interests in such covered fund;
(viii) Market conditions; and
(ix) Any other factor that the Board believes appropriate.
(4)
(5)
(d)
(1) The prohibition contained in § 75.10(a) does not apply to a qualifying foreign excluded fund.
(2) For purposes of this paragraph (d), a qualifying foreign excluded fund means a banking entity that:
(i) Is organized or established outside the United States, and the ownership interests of which are offered and sold solely outside the United States;
(ii)(A) Would be a covered fund if the entity were organized or established in the United States, or
(B) Is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in financial instruments for resale or other disposition or otherwise trading in financial instruments;
(iii) Would not otherwise be a banking entity except by virtue of the acquisition or retention of an ownership interest in, sponsorship of, or relationship with the entity, by another banking entity that meets the following:
(A) The banking entity is not organized, or directly or indirectly controlled by a banking entity that is organized, under the laws of the United States or of any State; and
(B) The banking entity's acquisition of an ownership interest in or sponsorship of the fund by the foreign banking entity meets the requirements for permitted covered fund activities and investments solely outside the United States, as provided in § 75.13(b);
(iv) Is established and operated as part of a bona fide asset management business; and
(v) Is not operated in a manner that enables any other banking entity to evade the requirements of section 13 of the BHC Act or this part.
The revisions and additions read as follows:
(a) * * *
(2) * * *
(i) Acquire and retain any ownership interest in a covered fund in accordance with the requirements of §§ 75.11, 75.12, or 75.13;
(ii) * * *
(C) The Board has not determined that such transaction is inconsistent with the safe and sound operation and condition of the banking entity; and
(iii) Enter into a transaction with a covered fund that would be an exempt covered transaction under 12 U.S.C. 371c(d) or § 223.42 of the Board's Regulation W (12 CFR 223.42); and
(iv) Extend credit to or purchase assets from a covered fund, provided:
(A) Each extension of credit or purchase of assets is in the ordinary course of business in connection with payment transactions; settlement services; or futures, derivatives, and securities clearing;
(B) Each extension of credit is repaid, sold, or terminated by the end of five business days; and
(C) The banking entity making each extension of credit meets the requirements of section 223.42(l)(1)(i) and (ii) of the Board's Regulation W (12 CFR 223.42(l)(1)(i) and(ii)), as if the extension of credit was an intraday extension of credit, regardless of the duration of the extension of credit.
(3) Any transaction or activity permitted under paragraphs (a)(2)(iii) or (iv) must comply with the limitations in § 75.15.
(c)
For the reasons set forth in the Common Preamble, the Securities and Exchange Commission proposes to amend part 255 to chapter II of Title 17 of the Code of Federal Regulations as follows:
12 U.S.C. 1851.
(f)
(1) Is organized or established outside the United States, and the ownership interests of which are offered and sold solely outside the United States;
(2)(i) Would be a covered fund if the entity were organized or established in the United States, or
(ii) Is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in financial instruments for resale or other disposition or otherwise trading in financial instruments;
(3) Would not otherwise be a banking entity except by virtue of the acquisition or retention of an ownership interest in, sponsorship of, or relationship with the entity, by another banking entity that meets the following:
(i) The banking entity is not organized, or directly or indirectly controlled by a banking entity that is organized, under the laws of the United States or of any State; and
(ii) The banking entity's acquisition or retention of an ownership interest in or sponsorship of the fund meets the requirements for permitted covered fund activities and investments solely outside the United States, as provided in § 255.13(b);
(4) Is established and operated as part of a bona fide asset management business; and
(5) Is not operated in a manner that enables any other banking entity to evade the requirements of section 13 of the BHC Act or this part.
The revisions and additions read as follows:
(c) * * *
(1)
(A) Is organized or established outside of the United States; and
(B) Is authorized to offer and sell ownership interests, and such interests are offered and sold, through one or more public offerings.
(ii) With respect to a banking entity that is, or is controlled directly or indirectly by a banking entity that is, located in or organized under the laws of the United States or of any State and any issuer for which such banking entity acts as sponsor, the sponsoring banking entity may not rely on the exemption in paragraph (c)(1)(i) of this section for such issuer unless ownership interests in the issuer are sold predominantly to persons other than:
(A) Such sponsoring banking entity;
(B) Such issuer;
(C) Affiliates of such sponsoring banking entity or such issuer; and
(D) Directors and senior executive officers as defined in section 225.71(c) of the Board's Regulation Y (12 CFR 225.71(c)) of such entities.
(iii) For purposes of paragraph (c)(1)(i)(B) of this section, the term “public offering” means a distribution (as defined in § 255.4(a)(3)) of securities in any jurisdiction outside the United States to investors, including retail investors, provided that:
(A) The distribution is subject to substantive disclosure and retail investor protection laws or regulations;
(B) With respect to an issuer for which the banking entity serves as the investment manager, investment adviser, commodity trading advisor, commodity pool operator, or sponsor, the distribution complies with all applicable requirements in the jurisdiction in which such distribution is being made;
(C) The distribution does not restrict availability to investors having a minimum level of net worth or net investment assets; and
(D) The issuer has filed or submitted, with the appropriate regulatory authority in such jurisdiction, offering disclosure documents that are publicly available.
(3) * * *
(i) Is composed of no more than 10 unaffiliated co-venturers;
(8)
(A) Loans as defined in § 255.2(t);
(B) Rights or other assets designed to assure the servicing or timely distribution of proceeds to holders of such securities and rights or other assets that are related or incidental to purchasing or otherwise acquiring and holding the loans, provided that each asset that is a security (other than special units of beneficial interest and collateral certificates meeting the requirements of paragraph (c)(8)(v) of this section) meets the requirements of paragraph (c)(8)(iii) of this section;
(C) Interest rate or foreign exchange derivatives that meet the requirements of paragraph (c)(8)(iv) of this section; and
(D) Special units of beneficial interest and collateral certificates that meet the requirements of paragraph (c)(8)(v) of this section.
(E) Any other assets, provided that the aggregate value of any such other assets that do not meet the criteria specified in paragraphs (c)(8)(i)(A) through (c)(8)(i)(D) of this section do not exceed five percent of the aggregate value of the issuing entity's assets.
(ii)
(A) A security, including an asset-backed security, or an interest in an equity or debt security other than as permitted in paragraphs (c)(8)(iii), (iv), or (v) of this section;
(B) A derivative, other than a derivative that meets the requirements of paragraph (c)(8)(iv) of this section; or
(C) A commodity forward contract.
(iii)
(A) Cash equivalents—which, for the purposes of this paragraph, means high quality, highly liquid investments whose maturity corresponds to the securitization's expected or potential need for funds and whose currency corresponds to either the underlying loans or the asset-backed securities—for purposes of the rights and assets in paragraph (c)(8)(i)(B) of this section; or
(B) Securities received in lieu of debts previously contracted with respect to the loans supporting the asset-backed securities.
(iv)
(A) The written terms of the derivatives directly relate to the loans, the asset-backed securities, or the contractual rights or other assets described in paragraph (c)(8)(i)(B) of this section; and
(B) The derivatives reduce the interest rate and/or foreign exchange risks related to the loans, the asset-backed securities, or the contractual rights or other assets described in paragraph (c)(8)(i)(B) of this section.
(v)
(A) The special purpose vehicle that issues the special unit of beneficial interest or collateral certificate meets the requirements in this paragraph (c)(8);
(B) The special unit of beneficial interest or collateral certificate is used for the sole purpose of transferring to the issuing entity for the loan securitization the economic risks and benefits of the assets that are permissible for loan securitizations under this paragraph (c)(8) and does not directly or indirectly transfer any interest in any other economic or financial exposure;
(C) The special unit of beneficial interest or collateral certificate is created solely to satisfy legal requirements or otherwise facilitate the structuring of the loan securitization; and
(D) The special purpose vehicle that issues the special unit of beneficial interest or collateral certificate and the issuing entity are established under the direction of the same entity that initiated the loan securitization.
(10)
(11) * * *
(i) That is a small business investment company, as defined in section 103(3) of
(15)
(i)
(A) Loans as defined in § 255.2(t);
(B) Debt instruments, subject to paragraph (c)(15)(iv) of this section;
(C) Rights and other assets that are related or incidental to acquiring, holding, servicing, or selling such loans or debt instruments, provided that:
(
(
(
(
(
(D) Interest rate or foreign exchange derivatives, if:
(
(
(ii)
(A) Not engage in any activity that would constitute proprietary trading under § 255.3(b)(l)(i) of subpart A of this part, as if the issuer were a banking entity; and
(B) Not issue asset-backed securities.
(iii)
(A) Provides in writing to any prospective and actual investor in the issuer the disclosures required under § 255.11(a)(8) of this subpart, as if the issuer were a covered fund; and
(B) Ensures that the activities of the issuer are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly.
(iv)
(A) The banking entity does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the issuer or of any entity to which such issuer extends credit or in which such issuer invests; and
(B) Any assets the issuer holds pursuant to paragraphs (c)(15)(i)(B) or (i)(C)(
(v)
(A) Comply with the limitations imposed in §§ 255.14 (except the banking entity may acquire and retain any ownership interest in the issuer) and 255.15, as if the issuer were a covered fund; and
(B) Be conducted in compliance with, and subject to, applicable banking laws and regulations, including applicable safety and soundness standards.
(16)
(A) Is a venture capital fund as defined in 17 CFR 275.203(
(B) Does not engage in any activity that would constitute proprietary trading under § 255.3(b)(1)(i), as if the issuer were a banking entity.
(ii) A banking entity that acts as a sponsor, investment adviser, or commodity trading advisor to an issuer that meets the conditions in paragraph (c)(16)(i) of this section may not rely on this exclusion unless the banking entity:
(A) Provides in writing to any prospective and actual investor in the issuer the disclosures required under § 255.11(a)(8), as if the issuer were a covered fund; and
(B) Ensures that the activities of the issuer are consistent with safety and soundness standards that are substantially similar to those that would apply if the banking entity engaged in the activities directly.
(iii) The banking entity must not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the issuer.
(iv) A banking entity's ownership interest in or relationship with the issuer must:
(A) Comply with the limitations imposed in §§ 255.14 (except the banking entity may acquire and retain any ownership interest in the issuer) and 255.15, as if the issuer were a covered fund; and
(B) Be conducted in compliance with, and subject to, applicable banking laws and regulations, including applicable safety and soundness standards.
(17)
(A) If the entity is a trust, the grantor(s) of the entity are all family customers; and
(B) If the entity is not a trust:
(
(
(ii) A banking entity may rely on the exclusion in paragraph (c)(17)(i) of this section with respect to an entity provided that the banking entity (or an affiliate):
(A) Provides bona fide trust, fiduciary, investment advisory, or commodity trading advisory services to the entity;
(B) Does not, directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of such entity;
(C) Complies with the disclosure obligations under § 255.11(a)(8), as if such entity were a covered fund;
(D) Does not acquire or retain, as principal, an ownership interest in the entity, other than up to 0.5 percent of the entity's outstanding ownership interests that may be held by the banking entity and its affiliates for the purpose of and to the extent necessary for establishing corporate separateness or addressing bankruptcy, insolvency, or similar concerns;
(E) Complies with the requirements of §§ 255.14(b) and 255.15, as if such entity were a covered fund; and
(F) Complies with the requirements of 12 CFR 223.15(a), as if such banking entity and its affiliates were a member bank and the issuer were an affiliate thereof.
(iii) For purposes of paragraph (c)(17) of this section, the following definitions apply:
(A) “Closely related person” means a natural person (including the estate and estate planning vehicles of such person) who has longstanding business or personal relationships with any family customer.
(B) “Family customer” means:
(
(
(18)
(ii) A banking entity may rely on the exclusion in paragraph (c)(18)(i) of this section with respect to an issuer provided that:
(A) All of the ownership interests of the issuer are owned by the customer (which may include one or more of its affiliates) for whom the issuer was created, subject to paragraph (c)(18)(ii)(B)(
(B) The banking entity and its affiliates:
(
(
(
(
(
(
(d) * * *
(6)
(A) Has the right to participate in the selection or removal of a general partner, managing member, member of the board of directors or trustees, investment manager, investment adviser, or commodity trading advisor of the covered fund (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event, which includes the right to participate in the removal of an investment manager for cause or to nominate or vote on a nominated replacement manager upon an investment manager's resignation or removal);
(B) Has the right under the terms of the interest to receive a share of the income, gains or profits of the covered fund;
(C) Has the right to receive the underlying assets of the covered fund after all other interests have been redeemed and/or paid in full (excluding the rights of a creditor to exercise remedies upon the occurrence of an event of default or an acceleration event);
(D) Has the right to receive all or a portion of excess spread (the positive difference, if any, between the aggregate interest payments received from the underlying assets of the covered fund and the aggregate interest paid to the holders of other outstanding interests);
(E) Provides under the terms of the interest that the amounts payable by the covered fund with respect to the interest could be reduced based on losses arising from the underlying assets of the covered fund, such as allocation of losses, write-downs or charge-offs of the outstanding principal balance, or reductions in the amount of interest due and payable on the interest;
(F) Receives income on a pass-through basis from the covered fund, or has a rate of return that is determined by reference to the performance of the underlying assets of the covered fund; or
(G) Any synthetic right to have, receive, or be allocated any of the rights in paragraphs (d)(6)(i)(A) through (F) of this section.
(ii) Ownership interest does not include:
(A) Restricted profit interest which is an interest held by an entity (or an employee or former employee thereof) in a covered fund for which the entity (or employee thereof) serves as investment manager, investment adviser, commodity trading advisor, or other service provider, so long as:
(
(
(
(
(B) Any senior loan or senior debt interest that has the following characteristics:
(
(
(
(
(
The revisions and addition read as follows:
(b) * * *
(1) * * *
(ii)
(A) Does not own, control, or hold with the power to vote 25 percent or more of the voting shares of the company or fund; and
(B) Provides investment advisory, commodity trading advisory, administrative, and other services to the company or fund in compliance with the limitations under applicable regulation, order, or other authority.
(4)
(ii)
(5)
(ii) A banking entity shall not be restricted under this section in the amount of any investment the banking entity makes alongside a covered fund as long as the investment is made in compliance with applicable laws and regulations, including applicable safety and soundness standards.
(c) * * *
(1)(i) For purposes of paragraph (a)(2)(iii) of this section, the aggregate value of all ownership interests held by a banking entity shall be the sum of all amounts paid or contributed by the banking entity in connection with acquiring or retaining an ownership interest in covered funds (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 255.10(d)(6)(ii)), on a historical cost basis;
(ii) Treatment of employee and director restricted profit interests financed by the banking entity. For purposes of paragraph (c)(1)(i) of this section, an investment by a director or employee of a banking entity who acquires a restricted profit interest in their personal capacity in a covered fund sponsored by the banking entity will be attributed to the banking entity if the banking entity, directly or indirectly, extends financing for the purpose of enabling the director or employee to acquire the restricted profit interest in the fund and the financing is used to acquire such ownership interest in the covered fund.
(d)
(1)(i) The sum of all amounts paid or contributed by the banking entity in connection with acquiring or retaining an ownership interest (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 255.10(d)(6)(ii)), on a historical cost basis, plus any earnings received; and
(ii) The fair market value of the banking entity's ownership interests in the covered fund as determined under paragraph (b)(2)(ii) or (b)(3) of this section (together with any amounts paid by the entity in connection with obtaining a restricted profit interest under § 255.10(d)(6)(ii) of subpart C of this part), if the banking entity accounts for the profits (or losses) of the fund investment in its financial statements.
(2) Treatment of employee and director restricted profit interests financed by the banking entity. For purposes of paragraph (d)(1) of this section, an investment by a director or employee of a banking entity who acquires a restricted profit interest in his or her personal capacity in a covered fund sponsored by the banking entity
(e)
(2)
(i) Be submitted to the Board at least 90 days prior to the expiration of the applicable time period;
(ii) Provide the reasons for application, including information that addresses the factors in paragraph (e)(3) of this section; and
(iii) Explain the banking entity's plan for reducing the permitted investment in a covered fund through redemption, sale, dilution or other methods as required in paragraph (a)(2) of this section.
(3)
(i) Whether the investment would result, directly or indirectly, in a material exposure by the banking entity to high-risk assets or high-risk trading strategies;
(ii) The contractual terms governing the banking entity's interest in the covered fund;
(iii) The date on which the covered fund is expected to have attracted sufficient investments from investors unaffiliated with the banking entity to enable the banking entity to comply with the limitations in paragraph (a)(2)(i) of this section;
(iv) The total exposure of the covered banking entity to the investment and the risks that disposing of, or maintaining, the investment in the covered fund may pose to the banking entity and the financial stability of the United States;
(v) The cost to the banking entity of divesting or disposing of the investment within the applicable period;
(vi) Whether the investment or the divestiture or conformance of the investment would involve or result in a material conflict of interest between the banking entity and unaffiliated parties, including clients, customers, or counterparties to which it owes a duty;
(vii) The banking entity's prior efforts to reduce through redemption, sale, dilution, or other methods its ownership interests in the covered fund, including activities related to the marketing of interests in such covered fund;
(viii) Market conditions; and
(ix) Any other factor that the Board believes appropriate.
(4)
(5)
(d)
(2) For purposes of this paragraph (d), a qualifying foreign excluded fund means a banking entity that:
(i) Is organized or established outside the United States, and the ownership interests of which are offered and sold solely outside the United States;
(ii)(A) Would be a covered fund if the entity were organized or established in the United States, or
(B) Is, or holds itself out as being, an entity or arrangement that raises money from investors primarily for the purpose of investing in financial instruments for resale or other disposition or otherwise trading in financial instruments;
(iii) Would not otherwise be a banking entity except by virtue of the acquisition or retention of an ownership interest in, sponsorship of, or relationship with the entity, by another banking entity that meets the following:
(A) The banking entity is not organized, or directly or indirectly controlled by a banking entity that is organized, under the laws of the United States or of any State; and
(B) The banking entity's acquisition of an ownership interest in or sponsorship of the fund by the foreign banking entity meets the requirements for permitted covered fund activities and investments solely outside the United States, as provided in § 255.13(b);
(iv) Is established and operated as part of a bona fide asset management business; and
(v) Is not operated in a manner that enables any other banking entity to evade the requirements of section 13 of the BHC Act or this part.
The revisions and additions read as follows:
(a) * * *
(2) * * *
(i) Acquire and retain any ownership interest in a covered fund in accordance with the requirements of §§ 255.11, 255.12, or 255.13;
(ii) * * *
(C) The Board has not determined that such transaction is inconsistent with the safe and sound operation and condition of the banking entity; and
(iii) Enter into a transaction with a covered fund that would be an exempt covered transaction under 12 U.S.C. 371c(d) or § 223.42 of the Board's Regulation W (12 CFR 223.42); and
(iv) Extend credit to or purchase assets from a covered fund, provided:
(A) Each extension of credit or purchase of assets is in the ordinary course of business in connection with payment transactions; settlement services; or futures, derivatives, and securities clearing;
(B) Each extension of credit is repaid, sold, or terminated by the end of five business days; and
(C) The banking entity making each extension of credit meets the requirements of section 223.42(l)(1)(i) and (ii) of the Board's Regulation W (12 CFR 223.42(l)(1)(i) and(ii)), as if the extension of credit was an intraday extension of credit, regardless of the duration of the extension of credit.
(3) Any transaction or activity permitted under paragraphs (a)(2)(iii) or (iv) must comply with the limitations in § 255.15 of this section.
(c)
By order of the Board of Directors.
By the Securities and Exchange Commission.
On this matter, Chairman Tarbert and Commissioners Quintenz and Stump voted in the affirmative. Commissioners Behnam and Berkovitz voted in the negative. The document submitted to the CFTC Commissioners for a vote did not include Section IV.F. SEC Economic Analysis.
I respectfully dissent as to the Commission's decision to propose more revisions to the Volcker Rule. The Volcker Rule, in simple terms, contains two basic prohibitions for banking entities: (1) They may not engage in proprietary trading; and (2) they cannot have an ownership interest in, sponsor, or have certain relationships with a covered fund. Last September, the Commission, along with other Federal agencies,
Let's start by calling the Volcker Covered Fund Proposal (“Proposal”) what it is: A regulatory rollback.
The general purpose of the Volcker Rule is to eliminate excessive risk taking by banks that enjoy the benefits of U.S. taxpayer support while still preserving their ability to undertake banking activities that serve the public interest.
While a few of the proposed changes are consistent with this statutory purpose because they correct unintended consequences from the original regulation, the Proposal goes much further than reasonably necessary and appears to create substantial loopholes without effectively analyzing the potential risks. There is no quantitative analysis of those risks. The rationales provided to support these rollbacks are qualitative, legalistic, and summary in nature. They purport to provide “clarity,” allow banks to “diversify” investments, or improve bank competitiveness—none of which advance the goals articulated by Congress.
I am concerned that the proposed changes, along with the other regulatory reductions implemented in the proprietary trading provisions of the Volcker regulations in November 2019,
Much of the Proposal addresses regulations that will not impact, or will have only indirect impacts on, the CFTC's core mandate to regulate the derivatives markets.
The Volcker covered fund provisions could benefit from tailored revisions to fix some unintended consequences. The so called “super 23A” provisions restrict regular bank clearing activities for certain covered funds for which an affiliate provides services, such as investment management. Clearing services are not risk-taking activities. As another example, the existing regulations inadvertently convert some foreign covered funds into banking entities subject to the entire rule set when the statute intended to exclude those activities if they take place outside the United States. The Proposal would properly address these issues. Unfortunately, it also goes much further in proposing regulatory reductions without careful consideration of the risks involved.
I will discuss three particular provisions to illustrate my concerns. First, the Proposal would exclude “venture capital funds” from the covered funds definition with some minor limitations that are not based on the risks involved. The Proposal acknowledges that, as stated in the final release for the current Volcker regulations, venture capital funds are private equity funds. The Proposal states that the venture capital fund exclusion is based in part on several statements by members of Congress regarding venture capital funds. However, a close reading of the four statements cited in the Proposal shows that three of the four do not call for a complete exclusion of venture capital funds. Congress could have excluded venture capital funds if that were the intent. It did not.
The justification for the broad venture capital fund exclusion is flimsy. The Proposal asserts the exclusion could “promote and protect the safety and soundness of banking entities and the financial stability of the United States” by allowing banks to “diversify their permissible investment activities.”
A simple Google search reveals data indicating that venture capital investments historically have been high risk. One study found that about 75% of venture capital-backed firms in the United States did not return capital to investors.
The Proposal would add another new exclusion from covered fund regulation for “customer facilitation vehicles.” This exclusion is concerning because it is not well defined and could potentially become an end run around the Volcker rule. In effect, a bank could be the counterparty for the instruments in the vehicle sold to customers and thereby take on substantial risks permitted as a result of the exclusion. These risks are not addressed in the Proposal.
The Proposal states that such funds or “vehicles” would be used to facilitate customer needs. The brief example given is of accommodating a bank customer that wants to purchase structured notes issued through a vehicle, not the bank, “for certain legal, counterparty risk management, or accounting reasons specific to the customer.”
Furthermore, the Proposal acknowledges that the so called “customer facilitation” vehicles can in fact be ginned up by the banks themselves and that “marketing” the vehicles to the customers is not restricted. In effect, a bank could now create a fund of investments that it wants to hold, put the underlying instruments into a “vehicle” and then market the other side of the investments to customers in the form of security ownership in the vehicle. This exclusion has the potential to create a large loophole for creative bankers to exploit.
Finally, there is a special exclusion created for billionaires: The new “Family Wealth Management Vehicles” exclusion. This provision would exclude so called “family offices” from Volcker covered funds regulation. Unlike the prior two examples, this exclusion is not likely to materially increase undesirable risk taking by banks.
As I noted recently in a statement opposing family office exemptions from several CFTC rules, family offices are not used by ordinary families who may have a modest degree of wealth. Rather, the extraordinarily wealthy—including hedge fund operators, bankers, and super wealthy entrepreneurs—create these organizations to preserve, grow, and pass on their wealth to their descendants.
[T]he modern concept of the family office developed in the 19th century. In 1838, the family of financier and art collector J.P. Morgan founded the House of Morgan to manage the family assets. In 1882, the Rockefellers founded their own family office, which is still in existence and provides services to other families.
EY Family Office Guide,
Furthermore, there are indications that family offices for U.S. persons may be located
The Volcker Rule and related regulations are complicated. The regulations deserve careful, reasoned reassessment to maintain their effectiveness. Unfortunately, the Proposal is neither reasoned nor careful. It ignores the risk-reducing public policy for the Volcker rule and effectively acknowledges the fact that this rollback is driven by complaints from the very banks the rule is intended to make safer. No effort is made to assess the risks that the Proposal will now allow banks to assume. I cannot support the proposed changes to the Volcker rule because they do not conform to the statutory mandate for the rule and the Proposal does not carefully analyze the effect of the changes on the safety and soundness of our financial system. I therefore dissent.